How should the transaction price of $1,040,000 be allocated among the service obligations? (
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- Concord Company manufactures equipment. Concord’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Concord has the following arrangement with Winkerbean Inc. ● Winkerbean purchases equipment from Concord for a price of $960,000 and contracts with Concord to install the equipment. Concord charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Concord determines installation service is estimated to have a standalone selling price of $47,000. The cost of the equipment is $550,000. ● Winkerbean is obligated to pay Concord the $960,000 upon the delivery and…Crankshaft Company manufactures equipment. Crankshaft's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Crankshaft has the following arrangement with Winkerbean Inc. Winkerbean purchases equipment from Crankshaft for a price of $1,000,000 and contracts with Crankshaft to install the equipment. Crankshaft charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Crankshaft determines installation service is estimated to have a standalone selling price of $50,000. The cost of the equipment is $600,000. Winkerbean is obligated to pay Crankshaft the $1,000,000 upon the delivery…Concord Company manufactures equipment. Concord’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Concord has the following arrangement with Winkerbean Inc. ● Winkerbean purchases equipment from Concord for a price of $960,000 and contracts with Concord to install the equipment. Concord charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Concord determines installation service is estimated to have a standalone selling price of $47,000. The cost of the equipment is $550,000. ● Winkerbean is obligated to pay Concord the $960,000 upon the delivery and…
- Pharoah Company manufactures equipment. Pharoah’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Pharoah has the following arrangement with Winkerbean Inc. ● Winkerbean purchases equipment from Pharoah for a price of $960,000 and contracts with Pharoah to install the equipment. Pharoah charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Pharoah determines installation service is estimated to have a standalone selling price of $51,000. The cost of the equipment is $570,000. ● Winkerbean is obligated to pay Pharoah the $960,000 upon the delivery and…Pronghorn Company manufactures equipment. Pronghorn’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Pronghorn has the following arrangement with Winkerbean Inc. ● Winkerbean purchases equipment from Pronghorn for a price of $1,070,000 and contracts with Pronghorn to install the equipment. Pronghorn charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $599,000. ● Winkerbean is obligated to pay Pronghorn the $1,070,000 upon the delivery and installation of the equipment. Pronghorn delivers the equipment on June 1, 2020, and completes the…Culver Company manufactures equipment. Culver’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Culver has the following arrangement with Winkerbean Inc. ● Winkerbean purchases equipment from Culver for a price of $1,040,000 and contracts with Culver to install the equipment. Culver charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $581,000. ● Winkerbean is obligated to pay Culver the $1,040,000 upon the delivery and installation of the equipment. Culver delivers the equipment on June 1, 2020, and completes the installation of the equipment…
- Wildhorse Company manufactures equipment. Wildhorse’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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 Winkerbean Inc. ● Winkerbean purchases equipment from Wildhorse for a price of $940,000 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. Using market data, Wildhorse determines installation service is estimated to have a standalone selling price of $49,000. The cost of the equipment is $600,000. ● Winkerbean is obligated to pay Wildhorse the $940,000 upon the…Kingbird Company manufactures equipment. Kingbird’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. Kingbird has the following arrangement with Henderson Inc. ● Henderson purchases equipment from Kingbird for a price of $1,090,000 and contracts with Kingbird to install the equipment. Kingbird charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $615,000. ● Henderson is obligated to pay Kingbird the $1,090,000 upon the delivery and installation of the equipment. Kingbird delivers the equipment on June 1, 2020, and completes the installation of…Sweet Company manufactures equipment. Sweet’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Sweet has the following arrangement with Winkerbean Inc. ● Winkerbean purchases equipment from Sweet for a price of $930,000 and contracts with Sweet to install the equipment. Sweet charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Sweet determines installation service is estimated to have a standalone selling price of $46,000. The cost of the equipment is $560,000. ● Winkerbean is obligated to pay Sweet the $930,000 upon the delivery and installation of the…
- Oriole Company manufactures equipment. Oriole'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. Oriole has the following arrangement with Henderson Inc. Henderson purchases equipment from Oriole for a price of $1,020,000 and contracts with Oriole to install the equipment. Oriole charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $643,00o. Henderson is obligated to pay Oriole the $1,020,000 upon the delivery and installation of the equipment. Oriole delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020.…Carla Vista Company manufactures products ranging from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Carla Vista has the following arrangement with Pharoah Inc. Pharoah purchases equipment from Carla Vista for a price of $1,008,900 and contracts with Carla Vista to install the equipment. Carla Vista charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $654,000. . Pharoah is obligated to pay Carla Vista the $1,008,900 upon the delivery of the equipment. Carla Vista delivers the equipment on June 1, 2025, and completes the installation of the equipment on September 30, 2025. The…Carla Vista Company manufactures products ranging from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 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. Carla Vista has the following arrangement with Pharoah Inc. Pharoah purchases equipment from Carla Vista for a price of $1,008,900 and contracts with Carla Vista to install the equipment. Carla Vista charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $654,000. Pharoah is obligated to pay Carla Vista the $1,008,900 upon the delivery of the equipment. Carla Vista delivers the equipment on June 1, 2025, and completes the installation of the equipment on September 30, 2025. The…