Question

Crane Company sells goods that cost $275,000 to Pronghorn Company for $430,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $35,200. The fair value of the goods is $404,800. The goods were delivered on March 1, 2020. Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Pronghorn Company pays Crane $267,000 upon delivery of the goods and the balance at the completion of the installation.

xUsing the five-step process for revenue recognition, determine when and how much revenue would be recognized by Crane. Assume IFRS is followed. (Round percentage allocations to 2 decimal places, 15.25 and final answers to 0 decimal places, e.g. 5,275.)

Performance Obligation		When?		How much?
Deliver goods		choose a transaction date January 2, 2020March 1, 2020June 18, 2020		$enter a dollar amount rounded to 0 decimal places
Installation		choose a transaction date January 2, 2020March 1, 2020June 18, 2020		enter a dollar amount rounded to 0 decimal places
Total				$enter a total amount rounded to 0 decimal places

Prepare the journal entries for Crane on January 2, March 1, and June 18, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Answer 1

Performance Obligation	when	how much
Delivery of goods	March 1, 2020	$ 404,800
Installation	Jun 18, 2020	$ 35,200

Date	Particular	Debit	Credit
Jan 2, 2020	Pronghorn Company	$ 440,000
	Deferred Revenue --- Sales		$ 404,800
	Deferred Revenue --- Installation		$ 35,200
	( To record performance contract)
March 1, 2020	Deferred Revenue ---Sales	$ 404,800
	Sales Revenue		$ 404,800
	( To record sales revenue on the completion of perforation obligation)
March 1, 2020	Cash	$ 267,000
	Pronghorn Company		$ 267,000
	( To reorder receipt of payment)
Jun 18, 2020	Deferred Revenue ---Installation	$ 35,200
	To Installation Fees Revenue		$ 35,200
	( To record installation fees on the completion of performance obligation)
Jun 18, 2020	Cash	$ 177,000
	Pronghorn Company		$ 177,000
	( To record receipt of payment)