Carla Vista Company manufactures products ranging from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $$200,000$ to $$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. Carla Vista has the following arrangement with Pharoah Inc.

Pharoah purchases equipment from Carla Vista for a price of $$1,008,900$ and contracts with Carla Vista to install the equipment. Carla Vista charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $$654,000.$

Pharoah is obligated to pay Carla Vista the $$1,008,900$ upon the delivery of the equipment.

Carla Vista 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.

Assuming Carla Vista 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 $$44,250$; Carla Vista prices these services with a $20\%$ margin relative to cost$.$

$($a$)$

Your answer is incorrect.

How should the transaction price of $$1,008,900$ be allocated among the performance obligations? $($Do not round intermediate calculations. Round final answers to $0$ decimal places, e$.$g$.5,275.)$

Equipment $

Installation $