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Prepare the journal entry on december 1 for gordon

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Question

On December 1, 2018, Gordon Co. enters into a contract to sell Bon Secours Hospital an X-Ray machine and a training course for this machine in exchange for $3,000,000. The contract requires delivery and installation of the machine first but explicitly states that payment for the machine will not be made until the training course is delivered. Gordon identifies two performance obligations and allocates $2,500,000 of the transaction price to the machine and its installation and the remainder to the training course.

Gordon's cost of the machine is $1,500,000. Gordon incurs $300,000 costs when installing the machine at the hospital; Gordon's cost of providing the training course to the hospital's staff is $200,000. Gordon employs IFRS and its fiscal year ending is December 31.

Required

a) Prepare the journal entry on December 1, 2018, for Gordon.

b) Prepare the journal entry on December 15, 2018, for Gordon when the X-ray machine is delivered and installed at the hospital.

c) Prepare the journal entry on January 10, 2019, for Gordon when the training course is delivered to the hospital staff and Gordon receives full payment.

Reference no: EM132405355

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