Daikin Ltd sold an air conditioner to Mr Y for Rs 57,000 on 01/01/2020. The customer was informed that the AC would be installed on 07/01/2020 and installation fees would cost an extra 1,500 rupees. The customer agreed. Daikin Ltd also got the customer to enter into an AMC with the company for 3 years. The AMC, costing Rs 5,700, promised 1 free of charge maintenance every year for next 3 years. Discuss how should Daikin Ltd account the above figures for year ended 31/03/2020.
Sale of AC accounted in for year ended 31/3/20 in full Rs.57,000 as seller has transferred the property in the goods (significant risks and rewards in ownership) to the buyer for a consideration Installation fees accounted for year ended 31/3/20 in full Rs.1,500 under Completed Service Contract Method as rendering of services under a contract (only for installation) is completed. AMC charges Rs.5,700 should be accounted under proportionate completion method, that is spread over the period of AMC. The proportionate amount related to 2019-20 should be accounted for the year ended 31/3/20