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I have seen many different ways of doing this. For this particular question could you go over the correct revenue recognized date and the journal

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I have seen many different ways of doing this. For this particular question could you go over the correct revenue recognized date and the journal entries that go along with it. I have May 9: $1,760,000 and September 30: $8,800,000. In some cases, I have seen September 1 as that is the day the trains have been delivered. Help you be greatly appreciated!

AP4-2B (Revenue recognition) Derby Transportation Inc. designs and builds trains for rail networks across Canada. The company, which is publicly traded, has an October 31 year end. On March 15, 2020, Derby Transportation signed a contract with OM Corridor Corp. to design and build 10 high-speed trains, with each train consisting of seven passenger cars. The high-speed train will operate between Ottawa and Montreal. The following events took place in 2020 in relation to the contract: 1. March 15: At the signing ceremony, officials from Derby and OM sign a contract, which is for $11 million. Derby is to design, manufacture, and deliver the 10 trains to OM's train yards in Montreal. Derby's management estimates that the design component of the contract would be valued at $2 million if contracted for separately, while the manufacturing of the ten trains would be valued at a total $10 million if they were purchased separately. Derby agreed to provide a two-year assurance-type warranty for the trains, and the company's management estimates that the warranty claims would total $500,000 based on experience. OM agrees to pay a $5.1 million deposit within 14 days of signing the contract and to pay the balance within 45 days of the trains receiving final approval and certification from the Transportation Safety Board. 2. March 29: OM pays the deposit specified in the contract. 3. May 9: Derby's engineering staff complete the train design and it is approved by officials from OM as well as the Transportation Safety Board. 4. August 1: Derby completes construction of the 10 trains. 5. September 1: The 10 trains are delivered according to the contract to OM's Montreal train yards. 6. September 30: After testing for safety compliance, the trains receive final approval from OM and the Transportation Safety Board and are certified to carry passengers. 7. November 15: OM pays the balance owing on the contract. Required a. Using the five-step model for revenue recognition, determine when and how much revenue Derby would be able to recognize for the year ended October 31, 2020. Round percentages to nearest two decimal places. b. Based on your analysis in part a, prepare all of the journal entries required by Derby in relation to the contract. If no journal entry is required, explain why that is the case. REVENUE RECOGNIZED (STAND ALONE PRICE) FAIR VALUE % of Standalone Price (ALLOCATED TRANSACTION PRICE) REVENUE Design Component $2,000,000 16.0% $1,760,000 Manufacturing $10,000,000 80.0% $8,800,000 Warranty $500,000 4.0% $440,000 Total $12,500,000 100% $11,000,000 Revenue Recognized on May 9, 2020 $1,760,000 Revenue Recognized on September 30, 2020 $8,800,000 Performance obligation Stand-Alone (SA) Selling Price % of Total SA Selling Price Contract Price Allocation of Contract Price Design of the trains $2,000,000 16.7% X $11 M $1,837,000 Manufacturing of the trains $10,000,000 83.3% X $11 M $9,163,000 $12,000,000 100 % $11,000,000 AP4-2B (Revenue recognition) Derby Transportation Inc. designs and builds trains for rail networks across Canada. The company, which is publicly traded, has an October 31 year end. On March 15, 2020, Derby Transportation signed a contract with OM Corridor Corp. to design and build 10 high-speed trains, with each train consisting of seven passenger cars. The high-speed train will operate between Ottawa and Montreal. The following events took place in 2020 in relation to the contract: 1. March 15: At the signing ceremony, officials from Derby and OM sign a contract, which is for $11 million. Derby is to design, manufacture, and deliver the 10 trains to OM's train yards in Montreal. Derby's management estimates that the design component of the contract would be valued at $2 million if contracted for separately, while the manufacturing of the ten trains would be valued at a total $10 million if they were purchased separately. Derby agreed to provide a two-year assurance-type warranty for the trains, and the company's management estimates that the warranty claims would total $500,000 based on experience. OM agrees to pay a $5.1 million deposit within 14 days of signing the contract and to pay the balance within 45 days of the trains receiving final approval and certification from the Transportation Safety Board. 2. March 29: OM pays the deposit specified in the contract. 3. May 9: Derby's engineering staff complete the train design and it is approved by officials from OM as well as the Transportation Safety Board. 4. August 1: Derby completes construction of the 10 trains. 5. September 1: The 10 trains are delivered according to the contract to OM's Montreal train yards. 6. September 30: After testing for safety compliance, the trains receive final approval from OM and the Transportation Safety Board and are certified to carry passengers. 7. November 15: OM pays the balance owing on the contract. Required a. Using the five-step model for revenue recognition, determine when and how much revenue Derby would be able to recognize for the year ended October 31, 2020. Round percentages to nearest two decimal places. b. Based on your analysis in part a, prepare all of the journal entries required by Derby in relation to the contract. If no journal entry is required, explain why that is the case. REVENUE RECOGNIZED (STAND ALONE PRICE) FAIR VALUE % of Standalone Price (ALLOCATED TRANSACTION PRICE) REVENUE Design Component $2,000,000 16.0% $1,760,000 Manufacturing $10,000,000 80.0% $8,800,000 Warranty $500,000 4.0% $440,000 Total $12,500,000 100% $11,000,000 Revenue Recognized on May 9, 2020 $1,760,000 Revenue Recognized on September 30, 2020 $8,800,000 Performance obligation Stand-Alone (SA) Selling Price % of Total SA Selling Price Contract Price Allocation of Contract Price Design of the trains $2,000,000 16.7% X $11 M $1,837,000 Manufacturing of the trains $10,000,000 83.3% X $11 M $9,163,000 $12,000,000 100 % $11,000,000

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