Prepare journal entries for crane for revenue arrangement

Assignment Help Accounting Basics
Reference no: EM132234984

Question - Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $300,000 to $1,600,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following arrangement with Winkerbean Inc.

  • Winkerbean purchases equipment from Crane for a price of $1,250,000 and contracts with Crane to install the equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Crane determines that the installation service is estimated to have a fair value of $60,000. The cost of the equipment is $700,000.
  • Winkerbean is obligated to pay Crane the $1,250,000 upon delivery and installation of the equipment.

Crane delivers the equipment and completes the installation of the equipment on September 30, 2017. The equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately.

How should the transaction price of $1,250,000 be allocated among the service obligations?

Prepare the journal entries for Crane for this revenue arrangement in 2017, assuming Crane receives payment when installation is completed.

Reference no: EM132234984

Question regarding consolidated net income

What is consolidated net income for this year prior to reduction for the noncontrolling interest's share of the subsidiary's net income?

Board of directors detailing

Read Case Study I-2 entitled "VoIP2.biz, Inc.: Deciding on the Next Steps for a VoIP Supplier" on pages 128-143 in your textbook, Managing Information Technology. Write a de

Estimating future settlement payments under forward contract

Make all journal entries necessary on Candra Christensen's books in 2011, 2012, and 2013 to record the forward contract and the purchase of the lobster. For purposes of esti

Show the lower portion of the 2011 income statement

Prepare the journal entry to recognize the income tax benefit of the operating loss. Assume the weight of available evidence suggests future taxable income sufficient to benef

Acc for baber makayla module 2 cost volume profit analysis

Cost-Volume-Profit Analysis Case Assignment The Annie Smith Dance Center The Director of Annie Smith Dance Center is asking for assistance with the financial aspects of runnin

Stock price and tax advantage

The Carlton Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E ratio of 20. THE firm has $3 million in excess cas

Income of subsidiary and investment in subsidiary

How do I find income of subsidiary, investment in subsidiary, and retained earnings using equity, initial value, and partial equity method?

Malaysian accounting standards board and industry players

Eventually, the Malaysian Accounting Standards Board and industry players are able to convince the International Accounting Standards Board to come out with another set of a

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd