Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please, answer in detail with explanation Question- Corporation sells construction equipment to a customer for $50,000. The equipment comes with a standard 2-year warranty covering

Please, answer in detail with explanation

Question-

Corporation sells construction equipment to a customer for $50,000. The equipment comes with a standard 2-year warranty covering any repairs that are required during that time. It does not cover routine maintenance, and the warranty is voided if the customer does not perform the required routine maintenance as scheduled during the warranty period. Corporation estimates that it costs $1,200 on average to provide warranty repairs over the two-year period for customers who purchase this construction equipment.

Corporation offers an extended warranty that covers repairs for years 3 through 10. The price of the extended warranty is $3,000. Corporation estimates that it costs $2,500, on average, to provide the additional repairs required under the extended warranty.

Required: Assuming the customer chooses not to purchase the extended warranty, what journal entry(ies) should Corporation make at the time of the sale?

Assuming the customer chooses to purchase the extended warranty, what journal entry(ies) should Kruger make at the time of the sale?

Question. On November 1, 2019, ABC Corporation sold software and a six-month technical support contract to a customer for $80,000. ABC sells the same software without technical support for $60,000. It sells technical support for $30,000. ABC allocates the transaction price based on relative stand-alone values.

Required: What amount of revenue does ABC recognize in 2019 and in 2020?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Principles and Application

Authors: Arthur J. Keown, J. William Petty, David F. Scott, Jr.

10th edition

536514119, 536514110, 978-0536514110

More Books

Students also viewed these Finance questions

Question

Where is the position?

Answered: 1 week ago