Question 3 Enterprise Auto Inc. (Enterprise) sold a new limited-edition SUV to Millenium Ltd. on June 1, for $155,000. The SUV has a normal selling price of $173,000 and thus the price charged to Millenium is a special deal. Enterprise imported the SUV from Europe at a landed cost of $92,500. As part of the sale, Enterprise has included four free oil changes Millenium can use within the first two years of purchase and an extended five-year dealership warranty to cover any potential problems that may occur within the first five years of purchase. Enterprise has a service department that routinely provides oil changes to clients for $249 per change. The oil changes cost $120 per change in supplies. Enterprise also sells the extended warranty on a stand-alone basis for $13,500. Enterprise has a December 31 year end.

Instructions Use the five steps of revenue recognition from IFRS 15 to determine how Enterprise should account for this transaction. Also prepare the journal entries Enterprise will record for the first year, assuming that Millenium used the first of the four oil changes on November 10. (27 marks)