Reference no: EM133100759

Question 1 - Dania Bhd is a manufacturer of brooches for women. On 1 November 2021, Dania Bhd has supplied 200,000 units of brooches to one of its distributors at a cost of RM15 per unit. The distributor sells this product to its retailers at a price of RM33 per unit. The retailers have the right to return any unsold units to the distributor and the distributor also has the right of return to Dania Bhd. On 15 December 2021, the distributor returns 15,000 units of unsold brooches to Dania Bhd.

Required - Briefly explain the accounting treatment as to when revenue should be recognised by Dania Bhd.

Question 2 - EXCEL BERHAD is a supplier of ready-made and made-to-order furniture for the local market. On 1 August 2021, Rania went to the showroom of EXCEL BERHAD to buy a bedroom set at a price of RM150,000. The cost of the bedroom set is RM100,000. Under the agreement, Rania has asked EXCEL BERHAD to retain the bedroom set in its showroom until 31 August 2021. Title passes to Rania at the time the agreement is signed.

Required - i. Identify the performance obligations in the contract.

ii. Determine the timing of revenue recognition from this transaction.

iii. Prepare the journal entries to record the transaction using perpetual inventory system.