Question

In: Accounting

Please, read the question carefully. I need correct answers and clear explanation. Thank you! On Sept...

Please, read the question carefully. I need correct answers and clear explanation. Thank you!

On Sept 15, 2017, Julia Inc entered into a contract to provide 12 new deep fryers to a Montreal Poutinerie. Julia normally charges $1,500 for each deep fryer. As part of the agreement, Julia will provide on-site training at the Poutinerie’s 3 locations. Julia will host 3 separate training sessions at each location. For this training, Julia normally charges $700 / day.

The Poutinerie needed Julia’s team to re-work some electrical for the installation. This took Julia 6 hours at each location. When doing installation work normally, Julia charges $100/hour. The Poutinerie will pay Julia $25,000 in total.

The follow details are known:

The fryers were delivered on October 20, 2017

The fryers were installed between October 25 – October 31, 2017

The training was delivered on November 3 2017, November 5 2017, November 6 2017

Payments were made as follows:

$10,000 on September 30, 2017

$10,000 on October 25, 2017

$5,000 on November 20, 2017

Assume that Step 1 and 2 have been completed: There is a contract, and there are 3 separate performance obligations in the contract.

Complete steps 3 – 5 of the revenue recognition model under IFRS 15

Step 3 - Determine the Contract Price

Step 4 – Allocate the contract price to the performance obligations

Step 5 – Recognize Revenue

Note – you do not need to record the journal entries for step 5. Rather, you should discuss when to recognize revenue for each obligation.

Expert Solution

ekkarill92 answered 1 year ago

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