Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Note 2-Sale with a volume discount incentive On January 1, 2018 Delta began an arrangement to sell goods to a third party - entity B.
Note 2-Sale with a volume discount incentive On January 1, 2018 Delta began an arrangement to sell goods to a third party - entity B. The price of the goods was set at $100 per unit for all sales in the two-year period ending 31 December 2019. However, if sales of the product to entity B exceed 60,000 units in the two-year period ending 31 December 2019, then the selling price of all units is retrospectively set at $90 per item. Sales of the goods to entity B in the nine-month period ending on 30 September 2018 totaled 20,000 units and this volume of sales per month was not expected to change before 31 December 2019. However, in the year ended 30 September 2019, total sales of the goods to entity B were 35,000 and based on current orders from entity B, the estimate was revised. The directors of Delta estimated that the total sales of the goods to entity B in the two-year period ending 31 December 2019 would be more than 60,000 units. (6 marks) Required: Explain and show how the transactions in notes 1 and 2 would be reported in the financial statements of Delta for the year ended 30 September 2019
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started