Prepare the entry to record the sale on december

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On December 31, 2020, Sandhill Limited sells production equipment to Franco Corporation for $108,000. Sandhill includes a 1-year warranty service contract with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2020. Sandhill estimates the prices to be $105,318 for the equipment and $3,000 for the warranty.

Question 1) Prepare the entry to record the sale on December 31, 2020 using the relative fair value method.

Question 2) Prepare the entry to record the sale on December 31, 2020 using the residual value method, assuming the stand-alone value of the warranty has the most reliable estimate.

Reference no: EM132652345

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