Question
On July 15, 2021, Fatma & Co. signed a contract to provide Mitsudome Bakery with an ingredient-weighing system for a price of $87,600. The system
On July 15, 2021, Fatma & Co. signed a contract to provide Mitsudome Bakery with an ingredient-weighing system for a price of $87,600. The system included finely tuned scales that fit into Mitsudomes automated assembly line, Fatmas proprietary software modified to allow the weighing system to function in Mitsudomes automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis. (Fatma competes with other vendors who offer ongoing calibration contracts for Fatmas systems.) If Fatma was to provide these goods or services separately, it would charge $58,000 for the scales, $10,000 for the software, and $32,000 for the calibration contract. Fatma delivered and installed the equipment and software on August 1, 2021, and the calibration service commenced on that date. Assume that the scales, software and calibration service are all separate performance obligations. How much revenue will Fatma recognize in 2021 for this contract?
$59,568
$71,248
$87,600
$0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started