TLE Company sells prefabricated pools that cost $$80,000$ to customers for $$139,900.$

The sales price includes an installation fee, which is valued at $$20,000.$ Also, the sales

price includes $6$ months of pool service $($i$.$e$.,$ cleaning, chemicals, etc.$),$ which is valued

at $$150/$month$.$ Pool services begin immediately following the installation of the pool.

The fair value of the pool is $$132,000.$ Both the installation of the pool and the pool

services can be done by other, readily available, third parties. The installation of the

pool is expected to take $3$ months to complete.

TLE signs a contract on $1/1/2023$ with a homebuilder, Pheidias Development

Corporation $($PDC$),$ whereby PDC purchases $4$ of the prefabricated pools at the sales

price of $$139,900$ for each pool. These pools will be delivered, installed and serviced by

TLE at PDC$$s $4$ new model homes being built at its latest housing development in

northeast St$.$ Johns County. TLE is required to deliver and install one pool per quarter

during $2023.$ Delivery and installation of the first pool will begin on $1/1/2023.$

The contract specifies that PDC will pay $3/4$ of the sales price for each pool at the

beginning of each quarter when each pool installation is begun. PDC will pay the

remaining sales price when the pool is completely installed. All payments were made

timely by PDC during $2023.$

TLE delivers the pools on the first day of each new quarter $($e$.$g$.,1/1,4/1,$ etc.$)$ and

installation begins immediately thereafter. Installation of the pools is expected to be

completed $90$ days $(3$ months$)$ after each pool is delivered. For example, the pool

delivered on $1/1$ should be completely installed by $3/31.$

TLE was successful at delivering and installing each pool in its respective $2023$ quarter

with completion dates for each pool on $3/31,6/30,9/30$ and $12/31.$

TLE began pool services for each pool once it was fully installed. PDC did not extend

these services beyond the $6$ month period provided in the contract.

Requirements:

A$)$ Using any format, develop a revenue allocation analysis for each of the performance

obligations stated in the above arrangement for one pool only.

B$)$ record journal entries for TLE applicable to the period January $1$ through June $30,$

$2023.$ Be very careful...take special care to consider the last $3$ months of this

timeframe.

C$)$ Prepare a discussion $($i$.$e$.$ a paragraph of $3-5$ sentences$)$ that would describe the

impact, if any, from the following alteration $($bolded sentences$)$ to the sales

transaction$/$contract signed on $1/1/2023.$

Alteraton:

In addition, as a part of the contract, TLE will receive a potential performance

bonus of:

$$ $$20,000$ if the delivery and the installation of all four pools are all completed

by June $30,2023.$

Or$...$

$$ $$10,000$ if the delivery and the installation of all four pools are all completed

by September $30,2023.$

On January $1,2023,$ TLE estimates a $75\%$ chance of successfully completing the pools

by June $30,2023,$ and a $25\%$ chance of completing the pools by September $30,2023.$

TLE does not predict a most likely outcome as of $1/1/2023.$ TLE has a second crew

available to accelerate the delivery and installation of the $4$ pools. TLE has successfully

completed contracts with similar accelerated due dates with previous home developers.

The discussion should address the performance bonus as a separate performance

obligation $($interdependent or independent$),$ estimating variable consideration and the

timing recording such, and allocating transaction price to the performance obligations.

Quantification of all amounts should be included in the discussion.