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Please show calculations, Thank you!! 3. Allocate transaction price. Adams Appliance Store is an experienced home appliance dealer. Adams also offers a number of services
Please show calculations,
Thank you!!
3. Allocate transaction price. Adams Appliance Store is an experienced home appliance dealer. Adams also offers a number of services together with the home appliances that it sells. Assume that Adams sells refrigerators on a standalone basis. Adams also sells installation services and maintenance services for refrigerators. However, Adams does not offer installation or maintenance services to customers who buy refrigerators from other vendors. Pricing for refrigerators is as follows. Refrigerator only $1030 Refrigerator with Installation service 1138 Refrigerator with maintenance services 1246 Refrigerator with installation and maintenance services 1300 In each instance in which maintenance services are provided the maintenance service is separately priced within the arrangement at $216. Additionally, the incremental amount charged by Adams for installation approximates the amount charged by independent third parties. Instructions (a) Assume that a customer purchases a dishwasher with both installation and maintenance services for $1300. Based on its experience, Adams believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately. Identify the separate performance obligations related to Adams's revenue arrangement. (b) Indicate the amount of revenue that should be allocated to the dishwasher, the installation, and to the maintenance contract. (c) Prepare the necessary journal entry for AdamsStep by Step Solution
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