You are required to write necessary treatments per IFRS 15. Also show the net effect of this transaction on the financial statements of the firm.
A company entered into a contract with one of the customer to supply a sophisticated machinery for 200,000 on 01/07/2020. The Contract is coming with selling a machinery, 3 years maintenance and a one-year replacement guarantee. The stand-alone selling price of machinery is 120,000, the replacement guarantee costs 10,000 and free services expected to costs the company 20,000. As per the terms of sales, the customer may pay to the firm either on 01/01/2020- 200,000, 01/03/2020- 210,000 or 01/05/2020- 225,000. As per past experience there is high probability that the customer pays on 01/05/2020.
You are required to write necessary treatments per IFRS 15. Also show the net effect of this transaction on the financial statements of the firm.
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