13. When should a US entity not include an estimate of variable consideration in determining the transaction price?

14. Company X sells standard lawn mowers to Biggy Hardware (BH) for $100. BH is Company Xs largest customer. Company X offers BH the following discounts based on purchases in a calendar year:

1 to 999 lawn mowers: 0% discount

1,000 to 1,500 lawn mowers: 3% discount

More than 1,500 lawn mowers: 5% discount

BHs purchasing pattern has been very consistent over its twenty year relationship history with Company X. Company Xs management has assigned a 10% probability to a 0% discount, a 70% probability to a 3% discount and a 20% probability to a 5% discount.

1. What is the estimated transaction price if the most likely amount is used?

2. What is the estimated transaction price if the expected value method is used?

3. Should any of the estimated variable consideration included in the transaction price be constrained?

15. World Soccer sells new goals to a customer for $1 million. The goals are delivered immediately, but payment isnt due until two years from the purchase date. The typical credit rate for this customer because of its credit characteristics is 8%. What are the journal entries World Soccer will record over the two-year period?

16. New Tech sells new widgets for $1,000. One of its customers is short on cash so they pay $800 in cash and trade in a used widget with a fair value of $300. What is the journal entry New Tech would record for this transaction?

17. ABC Corporation enters into a contract with a customer to sell items for $90,000. The contract includes two items of product A and one item of each product B and C. The standalone purchase price is $15,000 for product A, $25,000 for product B and $45,000 for product C. How should ABC Corporation allocate the transaction price for this contract?

18. Green View Corporation (GVC) enters into a contract to sell four products (A, B, C and D) for a total transaction price of $500,000. Each product is properly classified as a separate performance obligation. GVC only sells products A and B on an individual basis, thus it must estimate the standalone selling prices for product C and D. Information on these four products follows:

Product	Standalone selling price	Forecasted cost	Market competitor price
A	$100,000	$ 80,000	$108,000
B	200,000	166,000	206,000
C	Not available	82,000	102,000
D	Not available	72,000	94,000
Total		$400,000	$510,000

1. How should GVC allocate the transaction price to the four products using the cost plus margin approach?

2. How should GVC allocate the transaction price to the four products using the adjusted market assessment approach?

3. How should GVC allocate the transaction price to the four products using the residual approach?