Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pan c.1 Indicate whether each of the below options is a separate performance obligation or a variable consideration? Customers accumulate points for every dollar spent

image text in transcribed
Pan c.1 Indicate whether each of the below options is a separate performance obligation or a variable consideration? Customers accumulate points for every dollar spent at Madeline's Book Store. The points can be redeemed for books once certain levels are met. Customers can get 5% cash back for every $100 spent on eco-friendly products. Upon purchase of any name-brand TV, customers can purchase a 5-year extended warranty at a 25% discount. On July 15, 2021, Ortiz & Co, signed a contract to provide EverFresh Bakery with an ingredient- weighing system for a price of $90,000. The system included finely tuned scales that fit into EverFresh's automated assembly line, Ortiz's proprietary software modified to allow the weighing system to function in EverFresh's automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis. (Ortiz competes with other vendors who offer ongoing calibration contracts for Ortiz's systems.) If Ortiz was to provide these goods or services separately, it would charge $60,000 for the scales, $10,000 for the software, and $30,000 for the calibration contract. Ortiz delivered and installed the equipment and software on August 1, 2021, and the calibration service commenced on that date. C.2 How many performance obligations are there in this contract? What are they? I Now assume that the scales, software and calibration service are all separate performance obligations. (This is not necessarily the correct answer to the question above.) C.3 How much of the transaction price would be allocated to each performance obligation? Scales Software Calibration contract

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Healthcare Finance An Introduction To Accounting And Financial Management

Authors: Louis C. Gapenski

5th Edition

1567934250, 978-1567934250

More Books

Students also viewed these Finance questions

Question

=+Is this metric really applicable to what I want to accomplish?

Answered: 1 week ago

Question

=+How does this metric connect to my objectives?

Answered: 1 week ago