Assume that Eon sells laptop computer for $576 and charges $72 per month for a one-year service contract. Assume further that on January 1, Eon offered a special package price combining the laptop and the one-year service contract for $100 per month.

1.Identify the contract between the company and customer.

2.Identify the performance obligations (components of the bundled sale).

3.Determine the transaction price.

4.Allocate the transaction price to the performance obligations proportionately based on the normal retail prices of the performance obligations.

5.Determine the amount of revenue that should be recorded related to the bundled sale in the first quarter (January 1 to March 31).