Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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 Adams

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_2

Step: 3

blur-text-image_3

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

Implementing And Auditing The Internal Control System

Authors: D. Chorafas

2001edition

0333929365, 978-0333929360

More Books

Students also viewed these Accounting questions

Question

9. What is interaction?

Answered: 1 week ago

Question

What is group replacement? Explain with an example. (2-3 lines)

Answered: 1 week ago