View Policies Current Attempt in Progress Oriole Company manufactures equipment. Oriole's products range from simple automated...
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View Policies Current Attempt in Progress Oriole Company manufactures equipment. Oriole's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $400,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Oriole has the following arrangement with Marx Inc. Marx purchases equipment from Oriole for a price of $920,000 and contracts with Oriole to install the equipment. Oriole charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $643,000. Marx is obligated to pay Oriole the $920,000 upon the delivery and installation of the equipment. Oriole delivers the equipment on June 1, 2025, and completes the installation of the equipment on September 30, 2025. The equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately. Assume Oriole does not have market data with which to determine the standalone selling price of the installation services. As a result, an expected cost plus margin approach is used. The cost of installation is $32,500; Oriole prices these services with a 20% margin relative to cost. (a) How should the transaction price of $920,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to O decimal places, e.g. 5,275.) Equipment Installation $ eTextbook and Media List of Accounts Save for Later Attempts: 0 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. View Policies Current Attempt in Progress Oriole Company manufactures equipment. Oriole's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $400,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Oriole has the following arrangement with Marx Inc. Marx purchases equipment from Oriole for a price of $920,000 and contracts with Oriole to install the equipment. Oriole charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $643,000. Marx is obligated to pay Oriole the $920,000 upon the delivery and installation of the equipment. Oriole delivers the equipment on June 1, 2025, and completes the installation of the equipment on September 30, 2025. The equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately. Assume Oriole does not have market data with which to determine the standalone selling price of the installation services. As a result, an expected cost plus margin approach is used. The cost of installation is $32,500; Oriole prices these services with a 20% margin relative to cost. (a) How should the transaction price of $920,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to O decimal places, e.g. 5,275.) Equipment Installation $ eTextbook and Media List of Accounts Save for Later Attempts: 0 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
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