Prepare the journal entries in gen z limited

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Reference no: EM133070562

QUESTION - PART A - We Light Up Your Life Limited sells generators at a price of R100 000 each. The sale of the generators includes a warranty that the generator will function as intended for up to a year. Included in the contract price is a further extended warranty covering the next 2 years during which the period the entity promises to repair the generator if necessary. The extended warranty is available for sale separately for R15 000. With reference to IFRS 15, discuss how the above should be accounted for? Include journal entries if required.

PART B - Gen Z Limited signed a contract on the 28th of February 2020, with Wahoo Limited (the customer), to install a generator at their new offices in New Germany, the terms of which included the following: - Gen Z Limited agreed to supply and install the generator before the 30th of June 2020 - Wahoo Limited agreed to pay R150 000, in advance on the 31st of March 2020. Gen Z Limited installed the generator on the 17th of June 2020 on which date, the customer obtained control. Wahoo Limited paid the promised consideration on the 31st of May 2020.

Prepare the journal entries in Gen Z Limited if:

a) Contract is non-cancellable.

b) Contract is cancellable in the event of non-performance.

Reference no: EM133070562

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