Wildhorse Company manufactures equipment. Wildhorse's products range from simple automated machinery to complex systems

containing numerous components. Unit selling prices range from $$400,000$ to $$1,500,000$ and are quoted inclusive of installation. The

installation process does not involve changes to the features of the equipment and does not require proprietary information about the

equipment in order for the installed equipment to perform to specifications. Wildhorse has the following arrangement with Handley

Inc.

Handley purchases equipment from Wildhorse for a price of $$920,000$ and contracts with Wildhorse to install the equipment.

Wildhorse charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the

equipment is $$594,000.$

Handley is obligated to pay Wildhorse the $$920,000$ upon the delivery and installation of the equipment.

Wildhorse delivers the equipment on June $1,2025,$ and completes the installation of the equipment on September $30,2025.$ The

equipment has a useful life of $10$ years. Assume that the equipment and the installation are two distinct performance obligations

which should be accounted for separately.

Assume Wildhorse does not have market data with which to determine the standalone selling price of the installation services. As a

result, an expected cost plus margin approach is used. The cost of installation is $$37,900$; Wildhorse prices these services with a $20\%$

margin relative to cost$.$