Discuss the multiple-deliverable arrangement

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Question: (Multiple-Deliverable Arrangement) On December 31, 2014, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a 1-year warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2014. Grando estimates the prices to be $48,800 for the equipment and $1,200 for the warranty.

Instructions: (a) Prepare the journal entry to record this transaction on December 31, 2014.

(b) Indicate how much (if any) revenue should be recognized on January 31, 2015, and for the year 2015.

Reference no: EM131591992

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