Question 2 Part A and B

A. [The following information applies to the questions displayed below.] Wilson Links Products sells a product that involves two separate performance obligations: the SwingRight golf club weight and the SwingCoach teaching software. SwingRight has a stand-alone selling price of $155. Wilson sells both the SwingRight and the SwingCoach as a package deal for $210. The SwingCoach software is not sold separately. Wilson is aware that other vendors charge $110 for similar software, and Wilsons prices are generally 10% lower than what is charged by those vendors. Wilson estimates that it incurs approximately $70 of cost per copy of the software, and usually charges 50% above cost on similar products.

Estimate the stand-alone selling price of the software using the adjusted market assessment approach.

Multiple Choice

• $99

• $55

• $79

• $35

B. Arizona Desert Homes (ADH) constructed a new subdivision during 2017 and 2018 under contract with Cactus Development Co. Relevant data are summarized below:

Contract amount		$	3,450,000
Cost:	2017		1,300,000
	2018		700,000
Gross profit:	2017		950,000
	2018		500,000
Contract billings:	2017		1,725,000
	2018		1,725,000

ADH recognizes revenue upon completion of the contract. What is the journal entry in 2018 to record revenue?

Multiple Choice

• Cost of construction	2,250,000
  Gross profit	1,200,000
  Revenue from long-term contracts		3,450,000

• Construction in progress	500,000
  Cost of construction	700,000
  Revenue from long-term contracts		1,200,000

• Construction in progress	1,450,000
  Cost of construction	2,000,000
  Revenue from long-term contracts		3,450,000

• Accounts receivable	1,725,000
  Revenue from long-term contracts		1,725,000