Question

Blossom Company manufactures equipment. Blossom's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $230,000 to $1,520,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Blossom has the following arrangement with Winkerbean Inc. • Winkerbean purchases equipment from Blossom on May 2, 2020, for a price of $1,115,500 and contracts with Blossom to install the equipment. Blossom charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Blossom determines that the installation service is estimated to have a fair value of $34,500. The cost of the equipment is $700,000. • Winkerbean is obligated to pay Blossom the $1,081,000 upon delivery of the equipment and the balance on the completion of the installation Blossom delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately. Allocate the transaction price of $1,115,500 among the performance obligations of the contract. Assume Blossom follows IFRS. (Round percentage allocations to 2 decimal places, eg. 12.25 and final answers to O decimal places, e.g. 5,275.) Delivery equipment $ Installation A e Textbook and Media List of Accounts Prepare any journal entries for Blossom on May 2, June 1, and September 30, 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 for the amounts. Record journal entries in the order presented in the problem.)

Answer 1

Answer Allocation of Tigapition Price - Allocat129_of the equipment sales revenue of $ 1115500 is should be based on the fair market valte of equipment and installation, L In thie question, it is considered that foje market valye of equipment and 19 shallation is $ VISSOO und $ 34560 vespectively The total fair market value is $ (115 500 + 34500) طولاو و إہ عدلعوا التسطيبط - 000ريال کا که the transqalt og pise o 1600 x 1115500 - - 1082035 : Neljevery Equimeals of basis vain 1115,500 X 1115500 . Misgooo Installation 34 500 x HSSO 33465 1150000

| Journal Entjes Blossom Company Jaung) Enlye, of Date I Amt. $ Amt (1) er 1081000 84500 - Particular 20204 cash Ale Accounts Receivable Aloneta px A t o Sales Reuenye - [991pment - To Saulie Reveque - Installaliin I (Being to record sale of equipment tandº installation of service provided) 1022035 33465 June | 2015 out of Goods sold Als ti p o 700000 - To Inventory Ale coeing to record cost of geals vold) 700000 Sep 2010 Cash Ale On 34100 To Accounto Receivable A 34500 - (Belag cash collected after the installa. *Hon of the equipment) Totul 11830Ovo 11850,000 The equipment performance_Olligation and the installating are boo distinct heqce_ accounted sepquetely