Churchill HVAC Inc. buys and sells heating and air-conditioning units that are used in homes across Scarborough. The company follows IFRS. Unit selling prices range from $2,250 to $15,000.

		Churchill sells a heating system to Drake on November 15, 2019. The selling price for the heating system is usually $13,500.
-		Churchill will also install the heating system. The estimated fair value of the installation is $1,500. Churchill sold the heating system with installation to Drake for $14,250. The heating system cost Churchill $6,000. Drake is obligated to pay Churchill $3,000 upon delivery of the heating system and the balance on December 15th.

• Churchill delivers the equipment on November 24th, 2019, and completes the installation on December 2nd, 2019.

On December 15^th Drake informs Churchill that they will not be able to pay their account that is due. The two parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be repaid in one year from now. The maturity value of the note is $12,375. Drake is a bit of credit risk and typically borrows funds at a rate of 10%. Churchill is much more credit worthy and has various loans at 8% interest. The companys year end is December 31^st.

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