Manufacturer M, a large equipment manufacturer, enters into a contract to sell Product A to Customer C for an upfront cash payment of € 300,000. Upon signing the contract, Manufacturer M expects to deliver Product A to Customer C in two years’ time. The performance obligation will be satisfied at a point in time. Manufacturer M’s borrowing rate is 10% (the rate that would be used in a separate financing transaction). Manufacturer M concludes that the contract contains a significant financing component. What are the journal entries to record?
Manufacturer M, a large equipment manufacturer, enters into a contract to sell Product A to Customer C for an upfront cash payment of € 300,000. Upon signing the contract, Manufacturer M expects to deliver Product A to Customer C in two years’ time. The performance obligation will be satisfied at a point in time. Manufacturer M’s borrowing rate is 10% (the rate that would be used in a separate financing transaction). Manufacturer M concludes that the contract contains a significant financing component. What are the journal entries to record?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Manufacturer M, a large equipment manufacturer, enters into a contract to sell Product A to Customer C for an upfront cash payment of € 300,000. Upon signing the contract, Manufacturer M expects to deliver Product A to Customer C in two years’ time. The performance obligation will be satisfied at a point in time. Manufacturer M’s borrowing rate is 10% (the rate that would be used in a separate financing transaction).
Manufacturer M concludes that the contract contains a significant financing component.
What are the
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