1. Tompson recently sold a machine for 100,000. Revenue related to the sale of the machine is recognised upon delivery to the customers factory, and payment thereof is due promptly. Under the sales contract, Tompson has also committed to providing the customer with service and maintenance on the machine for 3 years at no additional charge. Tompson routinely sells the this type of machine for 90,000 on a stand alone basis, and it also offers a 3 year maintenance service on machines of this type for 30,000. It estimates that it will cost 10,000 to deliver the service and maintenace. The transaction price should be allocated as follows:

a) 70,000 for the machine and 30,000 for the service

b) 75,000 for the machine and 25,000 for the service

c) 90,000 for the machine and 10,000 for the service

) 100,000 for the machine and 0 for the service