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B3) Machinex Ltd, sells an assembly line on account for $100,000 on January 1, 2021. The details of the sale are: 1) The cost of
B3) Machinex Ltd, sells an assembly line on account for $100,000 on January 1, 2021. The details of the sale are: 1) The cost of the assembly line was $70,000, and the purchase price includes an assurance warranty for one year that the assembly line will be fixed or replaced if it does not perform to certain specifications. 2) The purchase price also includes 20 hours of service to maintain the assembly line over this period. The stand-alone price for the maintenance service is $2,500. 3) Based on past experience the company estimates the warranty costs for defective product will be $4,600. 4) Machinex Ltd. uses the cost deferral warranty method. B3) Machinex Ltd, sells an assembly line on account for $100,000 on January 1, 2021. The details of the sale are: 1) The cost of the assembly line was $70,000, and the purchase price includes an assurance warranty for one year that the assembly line will be fixed or replaced if it does not perform to certain specifications. 2) The purchase price also includes 20 hours of service to maintain the assembly line over this period. The stand-alone price for the maintenance service is $2,500. 3) Based on past experience the company estimates the warranty costs for defective product will be $4,600. 4) Machinex Ltd. uses the cost deferral warranty method
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