The divisional accountant for Quickbridge, Inc.'s R&D division has reached out to you for help. At the beginning of this year her division developed a new set of machinery that can be used to speed up production in several of Quickbridge, Inc.'s big clients. By improving their production, and sales, Quickbridge, Inc. hopes to improve their own bottom line: selling the new technology and selling more units to those clients as inputs. The division decided to test out the new machinery by offering it to Quickbridge, Inc.'s biggest client, Florican, Inc.. The deal with Florican, Inc. includes 25 new machines, one for each of Florican, Inc.'s plants, with installation and training for each machine. In addition, Quickbridge, Inc. will provide 12,500 units of Quickbridge, Inc.'s product to each plant as inputs for Florican, Inc.'s production. Finally, Quickbridge, Inc. will upgrade the machines through next year as they continue improving the software.

Florican, Inc. committed to a total price of $2,360,000, with a possible 2% discount if they paid in full within 15 months. By the end of the year, Florican, Inc. had made the payment and received the discount.

Each machine costs Quickbridge, Inc. $35,200 to produce and similar types of machines, while not exactly the same as Quickbridge, Inc.'s units, typically sell for $44,000. The production team believes that they can install each machine and train Florican, Inc.'s staff at each plant for about $3,960. There isn't any comparable installation or training available on the market, since these machines are unique, but installation and training for the closest matches typically sells for $4,400 from Quickbridge, Inc.'s competitors.

Quickbridge, Inc. has been selling their inventory to Florican, Inc. for years at $4 per unit. The cost of producing the units is $3. Even if the contract for the machines doesn't work out, Florican, Inc. would continue to buy units from Quickbridge, Inc., since Quickbridge, Inc. is the only supplier for that particular unit.

Quickbridge, Inc. estimates that the fair value of the upgrades is $24,000. Of course, they aren't 100% sure what the market value or cost will be, since they are still producing the software. During the year, they spent $5,760 on the project and estimated that they would spend an additional $13,440 next year.

By the end of the year, Quickbridge, Inc.'s R&D division had delivered, installed, and completed training for all four of the machines, performed the first upgrade, and delivered 80% of the contracted inventory. However, no entries have been made for the sale

Questions

How much of the transaction price will be allocated to inventory?

How much cash will be recognized in the entry?

How much revenue, if any, will the company get to recognize this period?

How much cost of goods sold will the company have to recognize for this contract this period?