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Seng Huan Berhad sells a furniture set to a customer for RM6,000 on 30 November...

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Accounting

  1. Seng Huan Berhad sells a furniture set to a customer for RM6,000 on 30 November 2020. Upon the request of the customer whose house is under renovation, Seng Huan holds the furniture set until 1 February 2021, when it is delivered to customers house, which is now renovated.
  2. Hitachee Berhad enters into a contract with a customer to sell a television set with 2 years assurance warranty for RM5,000 on 1 May 2020. The customer pay another RM2,000 to buy a 3-year service warranty to cover years 3, 4 and 5.
  3. Teguh Berhad enters into a contract to deliver Machine X and Machine Y to a customer for RM200,000. The contract requires Machine X to be delivered first. Customer is given 3 months credit period and is payable upon the delivery of the machine. Teguh Berhad has identified two performance obligations and allocated RM80,000 to Machine X and RM120,000 to Machine Y. Machine X was delivered on 1 November 2020 and Machine Y was delivered on 1 December 2020.

Required:

  1. Discuss the accounting treatment of revenue recognition for each of the situation.
  2. Prepare the related journal entries for each of the situation. Assume reporting period in each cases is 31 December 2020.

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