Pharoah Co. enters into a contact to sell Product A and Product B on January 2, 2020, for an upfront cash payment of $220,000. Product A will be delivered in two years (January 2, 2022) and Product B will be delivered in five years (January 2, 2025). Pharoah Co. allocates the $220,000 to Products A and B on a relative stand-alone selling price basis as follows. Stand-Alone Selling Prices Percent Allocated Allocated Amounts Product A $46,000 20% $44,000 Product B 184,000 80% 176,000 $230,000 $220,000 Pharoah Co. uses an interest rate of 5%, which is its incremental borrowing rate. 623 PM