Question

On 1 July 2021, Publicus sold a machine to a customer for £500,000 (excluding value added tax), and the customer paid in full when the machine was delivered on that date. In addition to the machine. Publicus agreed to provide maintenance for thirty months ending on 31 December 2023, Publicus has allocated £446,000 of the transaction price to the machine and £54,000 to the maintenance agreement. How much revenue should Publicus recognise from this sale in its income statement for the year to 31 December 2021?

a. £467,600
b. £500,000
c. £456,800
d. £446,000

Answer 1

The revenue recognized by Publicus from this sale in its income statement for the year to 31 December 2021 is £446,000.

Step-by-step explanation:

To determine the revenue Publicus should recognize from this sale in its income statement for the year to 31 December 2021, we need to consider the allocation of the transaction price. Publicus allocated £446,000 to the machine and £54,000 to the maintenance agreement. The revenue recognized from the sale will be the portion allocated to the machine.

Therefore, the revenue recognized by Publicus from this sale in its income statement for the year to 31 December 2021 is £446,000.