Jillian Inc. manufactures and installs customized equipment. On January 1, 2021, Jillian entered into a contract to sell equipment to a client for $800,000. This amount included installation. The company normally charges an additional fee for its installation services, but in this case, the installation was "bundled" with the equipment. The standalone value of the machinery was $750,000 while the cost of the installation was estimated at $100,000. Jillian had the equipment in its inventory on January 1, 2021. The equipment, which had a cost of $600,000, was customized (at no cos Jillan), and delivered to the client and installed on that date. Payment terms are as follows: January 1. 2021: $80,000 upon contract signing and delivery and installation. December 31, 2021; Balance due. Jillian Inc. follows IFRS and estimates that the interest rate for a similar financing arrangement would be 6%.
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- Denim, Inc. entered into a contract to sell equipment to Levi LLC. on October 1, 2021. Along with the equipment, Denim Inc. will provide one-year maintenance services on an as-needed basis, beginning once the equipment is installed. Denim offers similar services to other customers that purchased equipment sold by other vendors for $20,000. Denim Inc. will also provide installation services at no additional cost, a service that Denim Inc. typically charges $10,000. The equipment normally sells for $170,000 on its own. For the package deal, Levi LLC. agrees to pay a total of $180,000. The equipment was delivered and installed on November 1, 2021. Levi LLC. paid the entire invoice in cash on the delivery and installation date. How much revenue should Denim Inc. allocate to the various performance obligations in the above contract (round to the nearest dollar, if needed)? Prepare the Journal Entry for Denim Inc. to record the sale. Assume the equipment cost Denim Inc. $100,000 to…Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Carla Vista Corporation purchased computer equipment, installation and training for a total cost of $171180 on March 15, 2021. Estimated standalone fair values of the equipment, installation and training are $88500, $67200 and $34500 respectively. The journal entry to record the transaction on March 15, 2021 will include a credit to Sales Revenue for $171180. debit to Unearned Service Revenue of $34500. credit to Service Revenue of $67200. credit to Unearned Service Revenue of $31050.On January 1, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Gordon identifies two performance obligations and allocates $1,200 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $700; the shelves have a cost of $320. Instructions a. Prepare the journal entry on January 1, 2020, for Gordon. b. Prepare the journal entry on February 5, 2020, for Gordon when the wiring base is delivered to the customer. c. Prepare the journal entry on February 25, 2020, for Gordon when the shelving unit is delivered to the customer and Gordon receives full payment.
- Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $255,000 to $1,550,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following arrangement with Shamrock Inc. Shamrock purchases equipment from Crane on May 2, 2023, for a price of $1,065,000 and contracts with Crane to install the equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $700,000. (a) Shamrock is obligated to pay Crane the $1,009,000 on delivery of the equipment and the balance on the completion of the installation Crane delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two…Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2018. Estimated standalone fair values of the equipment, installation, and training are $90,000, $60,000, and $30,000 respectively. The transaction price allocated to equipment, installation and training is. $90,000, $60,000, $30,000 respectively $48,000, $48,000, $48,000 respectively $144,000 for the entire bundle. $72,000, $48,000 and $24,000 respectively. Use information below for questions 4 and 5. BALANCE SHEETS 12/31/19 12/31/18 Cash $408,000…Sandhill Company manufactures equipment. Sandhill's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $225,000 to $1,500,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Sandhill has the following arrangement with Tamarisk Inc. Tamarisk purchases equipment from Sandhill on May 2, 2023, for a price of $1,034,000 and contracts with Sandhill to install the equipment. Sandhill charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Sandhill determines that the installation service is estimated to have a fair value of $66,000. The cost of the equipment is $700,000. (a) Tamarisk is obligated to pay Sandhill the $968,000 on delivery of the equipment and the balance on the completion of the installation. Sandhill delivers the equipment on June 1,…
- Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Carla Vista Corporation purchased computer equipment, installation and training for a total cost of $129600 on March 15, 2021. Estimated standalone fair values of the equipment, installation, and training are $82500, $54000, and $25500 respectively. The transaction price allocated to equipment, installation and training isAccounting Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $250,000 to $1,510,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following arrangement with Winkerbean Inc. Winkerbean purchases equipment from Crane on May 2, 2020, for a price of $988,000 and contracts with Crane to install the equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Crane determines that the installation service is estimated to have a fair value of $52,000. The cost of the equipment is $800,000. Winkerbean is obligated to pay Crane the $936,000 upon delivery of the equipment and the balance on the completion of the installation Crane delivers the equipment on June 1, 2020, and…Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Sunland Corporation purchased computer equipment, installation and training for a total cost of $181440 on March 15, 2021. Estimated standalone fair values of the equipment, installation, and training are $99000, $67200, and $35400 respectively. The transaction price allocated to equipment, installation and training is $60480, $60480, $60480 respectively. $181440 for the entire bundle. $89100, $60480, $31860 respectively. $99000, $67200, $35400 respectively.