ce contract is sold separately for $54,000. BigBoy uses the relative stand-alone value method for multiple deliverables. et has a variable stand-alone value ranging from $31,500 $54,000 and BigBoy uses the residual value method

ce contract is sold separately for $54,000. BigBoy uses the relative stand-alone value method for multiple deliverables. et has a variable stand-alone value ranging from $31,500 $54,000 and BigBoy uses the residual value method

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

BigBoy Equipment Inc. sells heavy-duty forklift trucks. Model 217A has a stand-alone price of $126,000. BigBoy offers to sell the 217A inclusive of a three-year service contract for
$162,100.
Required:
Prepare a journal entry to record the sale of one Model 217A forklift truck plus service contract for $162,100 assuming: (If no entry is required for a transaction/event, select "No
journal entry required" in the first account field.)
1. A comparable service contract is sold separately for $54,000. BigBoy uses the relative stand-alone value method for multiple deliverables.
2. The service contract has a variable stand-alone value ranging from $31,500 to $54.000 and BigBoy uses the residual value method.
View transaction list
Journal entry worksheet
2
Record the sale of Model 217A assuming comparable service contract is sold
separately and using relative fair value method.
Note: Enter debits before credits:
Transaction
General Journal
Debit
Credit
>

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