Question
In: Accounting
Electronics Inc. buys and sells photocopy equipment that are used in businesses across Ontario. The company...
Electronics Inc. buys and sells photocopy equipment that are
used in businesses across Ontario. The company follow IFRS. Unit
selling prices range from $10,000 to $100,000.
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- Electronic Inc. delivers the photocopy equipment on October 15th, 2020, and completes the installation of the photocopy equipment on November 1st, 2020.
- On December 31st Centennial College pays for 2 months of maintenance services. The following December 31st Centennial College pays for 10 months of maintenance services.
On November 15th Centennial College informs Electronic Inc. that they will be not be able to pay their account that is due. The two parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be repaid in one year from now. The maturity value of the note is $67,098. Centennial College borrows fund at a rate of 6%. Electronic Inc. has various loans at 5% interest. The company’s yearend is December 31st.
- List the performance obligations?
- Explain when the revenue should be recognized for each performance obligation under IFRS. Support your answer by explaining why it should be recognized at the time you selected.
- Prepare the journal entries for 2020 and 2021. If there is no entry be sure to state, no entry. Hint remember to allocate the revenue among the different performance obligations and then use this information when you prepare the journal entries.
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