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Wildhorse Company manufactures products ranging from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $ 2 0 0 ,
Wildhorse Company manufactures products ranging from simple automated machinery to complex systems containing numerous
components. Unit selling prices range from $ to $ 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 Indigo Inc.
Indigo purchases equipment from Wildhorse for a price of $ 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. Using market data,
Wildhorse determines installation service is estimated to have a standalone selling price of $ The cost of the
equipment is $
Indigo is obligated to pay Wildhorse the $ upon the delivery of the equipment.
Wildhorse delivers the equipment on June and completes the installation of the equipment on September The
equipment has a useful life of years. Assume that the equipment and the installation are two distinct performance obligations
which should be accounted for separately.
a
How should the transaction price of $ be allocated among the performance obligations? Do not round intermediate
calculations. Round final answers to decimal places, eg
Equipment $
Installation $
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