Work Area Exercise 4 up to 5 points Ardvark Co. is building a new factory. Land was purchased for $550,000 as a factory site. The process of tearing down two buildings on the site need to be removed before beginning constructiion which is estimated to take 6 months. Demolish of the old building $60,000 and salvaged lumber and bricksold for $9,700. The title comapny received legal fees of $3,500 for title investigation and drafting the purchase contract. Ardvark paid $2,500 for a land survey and $56,000 for drawing the factory plans to an engineering firm. Title insurance on the land cost $5,500 and liability insurance of $1,400 for liability insurance. The building contractor received payments in two installments: $1,500,000 at the end of 3 months and $1,770,000 upon completion. Interest costs of $210,000 were incurred to finance the construction. Requirements Determine the cost of the land and the cost of the building as they should be recorded on the books of Ardvarkr Co. Assume that the land survey was for the building. Cost of land Cost of building Work Area Exercise 5 up to 5 points Majik Corporation offers a variety of electronic instruments, tooling equipment, technical reference books, and audio training manuals. Majik uses warranties and premiums as sales promotion techniques to attract customers. Electronic instruments and tooling equipment are sold with a 1-year warranty for replacement of parts and labor. Estimated warranty cost, based on past experience is 1.5% of sales. The premium offered on technical reference books and audio training manuals allows customers receive an MP3 player in exchange 250 for coupons and $25. Customers receive 1 coupon for each dollar spent on technical reference books and audio training manuals. Each MP3 player costs $35 and Makjik estimates 65% of the coupons given to customers will be redeemed Majik's total 2020 sales totaled $8,250,000 with $6,500,000 from electronic instruments and tooling equipment and $1,750,000 from technical reference books and audio training manuals. Warranty replacement parts and labor costs totaled $124.000 during 2020 ($64,000 of the work is related to pre-2020 sales). A total of 6,500 players used in the premium program were purchased during the year and there were 1,400,000 coupons redeemed in 2020. The balances in the accounts related to warranties and premiums on January 1, 2020, were as shown below. $ Premium inventory Premium liability Warranty liability 42,500 47,400 65,000 Requirements Determine the amounts that will be shown on the 2020 financial statements for the following. Warranty expense Warranty liability OOOO Premium expense Premium inventory Work Area Exercise 6 up to 5 points WA Electric is an experienced natural gas generator dealer and also offers a number of services for the natural gas generator it sells. WA Electric will sell natural gas generators on a standalone basis, with installation, or with install and maintenance service. Appliance Center also sells installation services and maintenance services for ovens. However, natural gas generator does not offer installation or maintenance services to customers who buy natural gas generators from other vendors. Pricing for natural gas generators is as follows. $ Standalone With installation service With maintenance services With installation and maintenance services 7,500 8.250 9,500 10,000 In each instance in which maintenance services are provided the maintenance service is separately priced within the arrangement at $2,000. Additionally, the incremental amount charged by WA Electric for installationis similar to the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services in the event Appliance Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $7,500. Requirements Assume that a customer purchases a natural gas generator with both installation and maintenance services for $10,000. Based on its experience, WA Electric believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately (i.e. the three components are distinct). Identify the separate performance obligations and amounts related to WA Electric's revenue arrangement. Natural gas generator Installation III Maintenance Work Area Exercise 4 up to 5 points Ardvark Co. is building a new factory. Land was purchased for $550,000 as a factory site. The process of tearing down two buildings on the site need to be removed before beginning constructiion which is estimated to take 6 months. Demolish of the old building $60,000 and salvaged lumber and bricksold for $9,700. The title comapny received legal fees of $3,500 for title investigation and drafting the purchase contract. Ardvark paid $2,500 for a land survey and $56,000 for drawing the factory plans to an engineering firm. Title insurance on the land cost $5,500 and liability insurance of $1,400 for liability insurance. The building contractor received payments in two installments: $1,500,000 at the end of 3 months and $1,770,000 upon completion. Interest costs of $210,000 were incurred to finance the construction. Requirements Determine the cost of the land and the cost of the building as they should be recorded on the books of Ardvarkr Co. Assume that the land survey was for the building. Cost of land Cost of building Work Area Exercise 5 up to 5 points Majik Corporation offers a variety of electronic instruments, tooling equipment, technical reference books, and audio training manuals. Majik uses warranties and premiums as sales promotion techniques to attract customers. Electronic instruments and tooling equipment are sold with a 1-year warranty for replacement of parts and labor. Estimated warranty cost, based on past experience is 1.5% of sales. The premium offered on technical reference books and audio training manuals allows customers receive an MP3 player in exchange 250 for coupons and $25. Customers receive 1 coupon for each dollar spent on technical reference books and audio training manuals. Each MP3 player costs $35 and Makjik estimates 65% of the coupons given to customers will be redeemed Majik's total 2020 sales totaled $8,250,000 with $6,500,000 from electronic instruments and tooling equipment and $1,750,000 from technical reference books and audio training manuals. Warranty replacement parts and labor costs totaled $124.000 during 2020 ($64,000 of the work is related to pre-2020 sales). A total of 6,500 players used in the premium program were purchased during the year and there were 1,400,000 coupons redeemed in 2020. The balances in the accounts related to warranties and premiums on January 1, 2020, were as shown below. $ Premium inventory Premium liability Warranty liability 42,500 47,400 65,000 Requirements Determine the amounts that will be shown on the 2020 financial statements for the following. Warranty expense Warranty liability OOOO Premium expense Premium inventory Work Area Exercise 6 up to 5 points WA Electric is an experienced natural gas generator dealer and also offers a number of services for the natural gas generator it sells. WA Electric will sell natural gas generators on a standalone basis, with installation, or with install and maintenance service. Appliance Center also sells installation services and maintenance services for ovens. However, natural gas generator does not offer installation or maintenance services to customers who buy natural gas generators from other vendors. Pricing for natural gas generators is as follows. $ Standalone With installation service With maintenance services With installation and maintenance services 7,500 8.250 9,500 10,000 In each instance in which maintenance services are provided the maintenance service is separately priced within the arrangement at $2,000. Additionally, the incremental amount charged by WA Electric for installationis similar to the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services in the event Appliance Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $7,500. Requirements Assume that a customer purchases a natural gas generator with both installation and maintenance services for $10,000. Based on its experience, WA Electric believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately (i.e. the three components are distinct). Identify the separate performance obligations and amounts related to WA Electric's revenue arrangement. Natural gas generator Installation III Maintenance