Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION TWO [ 4 0 ] Byte Right is a wholesale supplier of computer hard drives. Byte Right sold some hard drives to the American

QUESTION TWO [40]
Byte Right is a wholesale supplier of computer hard drives. Byte Right sold some hard drives to
the American branch if an international, blue-chip company called Terra One.
Byte Right and Terra One are long standing business partners and for that reason should Terra
One require hard drives, they are produced exclusively for Byte Right.
Byte Right and Terra One entered the following agreement:
- Contract date: 22 December 2020
- Contract price: R2000000
- Contract obligations:
o Supply of hard drives
o Installation of the hard drives at the American branch of Terra One and
o Providing maintenance services for three years whereby Byte Right will be
expected to provide backup whenever needed.
The three-year maintenance programme is very popular with all Byte Right customers.
The stand-alone prices of the various contract components were as follows: the hard drives are
R320000, the installation process is R840000 and the 3 year maintenance is R1320000.
Delivery and installation information:
- The American branch took delivery of the hard drives on the 28th of December 2020 but
were unable to use them until the installation team arrived at their offices to install them.
- The installation team arrived and completed the installation on 9th of January
2021.10.05
The contract price of R2000000 was payable by Terra One in instalments as follows:
- Half the total contract price is due in 2 equal instalments:
3
o On the 31st of December 2021
o On the 31st of December 2022
- Byte Right offers the option to pay in instalments to all of its customers
The contract does not contain a significant financing option.
Required
2.1 Identify the performance obligations and provide reasons to support your answer (6)
2.2 Determine the transaction price with reasons (8)
2.3 Determine the allocation of the transaction price (6)
2.4 Show the journal entries that will be required to be processed for the years ended 31
December 2020 and 31 December 2021

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

For Heintz/parrys College Accounting, Chapters 1-15, 22nd Edition, [instant Access]

Authors: James A. Heintz, Robert W. Parry

22nd Edition

1305669886, 9781305669888

More Books

Students also viewed these Accounting questions

Question

A=[8866]andB=[4541]A(3B)=[

Answered: 1 week ago

Question

Explain the various methods of job evaluation

Answered: 1 week ago

Question

Differentiate Personnel Management and Human Resource Management

Answered: 1 week ago

Question

Describe the functions of Human resource management

Answered: 1 week ago

Question

Why should an employer be concerned about negligent hiring?

Answered: 1 week ago

Question

What are the various methods of interviewing? Define each.

Answered: 1 week ago