Presented below are three revenue recognition situations.

(a) grupo sells goods to mtn for $900,000, payment due at delivery.
(b) grupo sells goods on account to grifols for $720,000, payment due in 30 days.
(c) grupo sells goods to magnus for $450,000, payment due in two installments: the first installment payable in 18 months and the second payment due 6 months later. the present value of the future payments is $417,600.

indicate the transaction price for each of these transactions and when revenue will be recognized.

Explanation:

The transaction price in each case would be shown below:

(A) Transaction price - $900,000 and the revenue is recognized at the point of sale or on the date when the sale is made

(B) Transaction price - $720,000 and the revenue is recognized at the point of sale or on the date when the sale is made

(C) Transaction price - Present value should be transaction price i.e $417,600 and the remaining amount $32,400 ($450,000 - $417,600) would be recognized over the 24 months i.e 18 months + 6 months

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.