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(i) On 1 January 20X1, HiTech Solutions sold equipment to a customer for $200,000 on interest free credit. The customer must pay for the goods on 31 December 20X2. The
customer would normally be able to borrow money at an interest rate of 8% per annum.(ii) On 1 October 20X1, HiTech Solutions sold equipment and one year’s worth of after-sales support to a customer for $130,000. The equipment has a retail price of $120,000 and the support service would normally retail for $40,000.
Required:Based upon application of IAS 18 Revenue, how should the two transactions be accounted for?
(i) Dr Receivables $171,468, Cr Revenue $171,468
(ii) Need the cost of capital and profit margin on after-sales support services
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