Problem 2 On December 31, 20x1, an entity subject to IFRS sold computer equipmen

Question

Problem 2

On December 31, 20x1, an entity subject to IFRS sold computer equipment and a three year maintenance agreement for the computer equipment for a total of $450,000 – the full amount was received on Dec 31.

The computer normally sells for $350,000 and the three year maintenance agreement sells for $150,000.

The customer can use the computer equipment without the maintenance agreement if they wanted to.

Required –

Prepare all journal entries to record the $450,000 of revenue at December 31, 20x1 and December 31, 20x2.

Explanation / Answer

Journal Entries Date Accounts title and explanations Debit $ Credit $ 31.12.17 Cash Account Dr. 450000     Sales revenue Acount (450000*70%) 315000      Unearned Service revenue (450000*30%) 135000 31.12.18 Unearned Service revenue Account Dr. 135000      Service revenue Account 135000

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