Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer with step by step solution and use provided template. Simpson Inc. buys and sells machines that are used in businesses across Ontario. The

Please answer with step by step solution and use provided template.image text in transcribedimage text in transcribedimage text in transcribed

Simpson Inc. buys and sells machines that are used in businesses across Ontario. The company follow IFRS. - Simpson Inc. sells a machine to Bart Inc. on August 16th, 2023. The selling price for the machine is usually $50,400. - Simpson Inc. will also install the machine. The estimated fair value of installing the machine is $3,920. - Simpson Inc. will also provide maintenance for the machine for 2 years. The estimated fair value of maintenance is $1,680. - Simpson Inc. sold the machine, installation and maintenance to Bart Inc. for $52,000. The machine cost Simpson Inc. $22,000. The company uses the perpetual inventory system. - Simpson Inc. bills and delivers the machine on September 1st, 2023. - Simpson completes the installation of the machine on September 15th, 2023. The customer pays cash for the installation on September 15th. - The maintenance starts on October 1st, 2023. The customer pays cash for the 2 years of maintenance. On November 1st Bart Inc. informs Simpson Inc. that they will be 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. Bart Inc. borrows fund at a rate of 8%. The company's year end is December 31st. i. Identify the performance obligations and calculate the revenue for each performance obligation (6 marks) Hint refer to chapter 6 allocating the transaction price to separate performance obligations. ii. Prepare the journal entries for 2023 and 2024. Hint remember to allocate the revenue among the different performance obligations and then use this information when you prepare the journal entries. In other use the answers you calculated in part i. In your answer do not use the discount on notes account. (16 marks) Hint this part uses concepts from chapter 6 and chapter 7 non-interest bearing notes. i. \begin{tabular}{|l|l|l|l|l|} \hline \begin{tabular}{l} List the Performance \\ Obligations \end{tabular} & Fair value & Percentage & \begin{tabular}{l} Transaction/ \\ Selling Price \end{tabular} & \begin{tabular}{l} Revenue for \\ each \\ performance \\ obligation \end{tabular} \\ \hline & & & & \\ \hline & & & & \\ \hline & & & & \\ \hline Total & & & & \\ \hline \end{tabular} ii. (15 marks)

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

Managerial Accounting An Introduction to Concepts Methods and Uses

Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil

10th Edition

1111822239, 324639767, 9781111822231, 978-0324639766

More Books

Students also viewed these Accounting questions

Question

Why is job analysis considered to be a basic HR tool?

Answered: 1 week ago

Question

5.1 Define recruitment and describe the recruitment process.

Answered: 1 week ago