Question 3 Part 1 Hammer Company is a well-established manufacturer of equipment used in the catering industry employing perpetual inventory system. Hammer's products range from small to large individual pieces of automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $5,000,000 and are quoted inclusive of the installation costs and training services On 1 March 2019. Hammer signed an agreement with Good Taste Company. The following terms are included in the agreement: Good Taste Company purchases equipment from Hammer for $3,000,000 and Hammer will provide the relevant training services. Good Taste paid the deposit of $2,000,000 when it signed the contract with Hammer on 1 March 2019. The equipment is delivered on 15 March 2019, and Good Taste is obligated to pay the outstanding balance upon the delivery. Training related to the equipment sold starts on 1 April 2019 and lasts for one year. The training services could be performed by other vendors and the standalone selling price of the training is estimated to be $200,000. The equipment has a useful life of 10 years. Cost of the equipment is $500,000. Financial year-end for Hammer is 30 June 2019. Required: (a) Describe the performance obligation(s) associated with the accounting for the sale of the equipment (3 marks) (b) If there is more than one performance obligation, how should the payment of $3,000,000 to be allocated to various components? (2 marks) (c) Prepare the necessary journal entries (with brief explanations of the relevant accounting treatments) in the books of Hammer Company related to the above transactions as at: () 1 March 2019 (ii) 15 March 2019 (11) 30 June 2019 (4 marks) (5 marks) (4 marks) Question.3.(continued) Part II Funn Fun Toys Company adopts a periodic inventory method for recording inventory. Physical stock-take was carried out on 31 December 2019 and revealed that cost of inventory on hand amounted to $250,180. However, the following events were discovered and all the below items were excluded from the inventory balance: (1) Merchandise costing of $35,000 was shipped by Fun n Fun Toys fob shipping point to a customer on 31 December 2019. The customer expected to receive the goods on 5 January 2020. (2) Merchandise costing of $55,080, which was shipped by a supplier f.o.b shipping point on 28 December 2019, was received by Fun n Fun Toys on 3 January 2020. (3) Merchandise amounted to $46,000 is held by Fun n Fun Toys on consignment. The consignor is Merry Company (4) At year-end, Funn Fun Toys had merchandise costing of S15,000 on consignment with SOGO department store. All the merchandise was located in SOGO's warehouse (5) Merchandise amounted to $28,000 was shipped by Fun n Fun Toys fo.b destination to a customer on 27 December 2019. The goods were received by the customer on 2 January 2020 (6) A batch of toys costing $40,000 were included in the preliminary inventory balance. However, the accountant just discovered that the expected selling price for those toys was $35,000 and the cost to sell was $2,000 Required: (a) Determine the correct inventory value to be reported on the company's financial statements as at the year-end date. (5 marks) (b) In general, briefly describe how the LCNRV rule is applied to report inventory on the company's financial statements as at the year ended date (2 marks)