Allocating Transaction Price to Performance Obligations and Recording SalesSoftware Supplier Inc. sells to a customer a perpetual software license and post-contract customer support for a 12-month period, commencing at the time that the software is activated. Software Supplier Inc. charges $360 upfront when the software is purchased and$24 a month for 12 months, due at the end of the month. Software Supplier Inc. sells the software separately for $480 while the standalone selling price of the post-contract customer support is $240.Note: Carry all decimals in calculations; round the final answer to the nearest dollar.Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).a. How should the transaction price be allocated among the performance obligation(s)?PerformanceObligationsSoftwareCustomer supportTransaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded)000 $$CheckAccount NameTo record sale of software.0 $00 $b. Prepare Software Supplier's journal entry to record sale of software to the customer and the entry for the first monthly payment.To record first monthly payment from customer.Dr.000000$Cr.000000000

A performance obligation is a commitment made in a legally enforceable agreement with a buyer to…

a. How should the transaction price be allocated among the performance obligation(s)? Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) 0 $ 0 0$ Software Customer support $ 0 $ 0 0 $ 0 0 0 and leave b. Prepare Software Supplier's journal entry to record sale of software to the customer and the entry for the first monthly payment.

a. How should the transaction price be allocated among the performance obligation(s)? Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) 0 $ 0 0$ Software Customer support $ 0 $ 0 0 $ 0 0 0 and leave b. Prepare Software Supplier's journal entry to record sale of software to the customer and the entry for the first monthly payment.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 40P

See similar textbooks

Similar questions

Software Supplier Inc. sells to a customer a perpetual software license and post-contract customer support for a 12-month period, commencing at the time that the software is activated. Software Supplier Inc. charges $240 upfront when the software is purchased and $16 a month for 12 months, due at the end of the month. Software Supplier Inc. sells the software separately for $320 while the standalone selling price of the post-contract customer support is $160. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). a. How should the transaction price be allocated among the performance obligation(s)? Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) Software Customer support $ $ Account Name To record sale of software.…
On January 1, 2018, PLDC enters into a wireless contract in which customer MBP is provided with handset and a voice and data plan for P 3,500 per month. PLDC identified the handset and wireless plan as separate performance obligations. The handset can be separately sold by PLDC for a price of 20,000 which provides observable evidence of stand-alone selling price. PLDC offers a 12-month service plan without a phone that includes the same level of services for a price of P 2,500 per month. 1. How much is the total transaction price to be allocated to the separate performance obligation? a. P 20,000 b. P 30,000 c. P 42,000 d. P 50,000 2. How much of the transaction price is to be allocated to the wireless plan? a. P 16,800 b. P 22,000 c. P 25,200 d. P 30,000 3. How much of the transaction price is to be allocated to the handset? a. P 16,800 b. P 20,000 c. P 22,000 d. P 25,200 4. On January 1, 2018, what is the entry at the…
A company separately sells home security equipment and 12 months of system monitoring service for $120 and $240, respectively. The company sells an equipment/monitoring bundle on January 1 for a total price of $270. The monitoring service begins immediately after the equipment is delivered and installed on January 1. Required: Determine the dollars of revenue that should be allocated to the equipment for each bundled sale. Determine the dollars of revenue that should be allocated to the service for each bundled sale. Determine the dollars of Sales Revenue and Service Revenue from the January 1 bundled sale that should be reported in the income statement for the period January 1–31.
Recognizing Revenue for Contracts that Contain Multiple Performance Obligations Nintendo manufactures the Switch, a gaming system that allows players to compete with each other online. The Switch includes the physical Switch as well as a one-year subscription to the Nintendo multiuser platform of Internet-based games. Nintendo sells individual one-year subscriptions to the Nintendo platform for $60. Nintendo sells individual Switch modules for $240. As a package deal, Nintendo sells the Switch System (module plus subscription) for $250. On January 1, 2019, Nintendo delivers 1,000 Switch Systems to Gamestop at a price of $250 per system. Nintendo receives $250,000 from Gamestop on January 25, 2019. Journal Entry each month Debit Credit Journal Entry at the point of sale Debit Credit Step 1: Identify the contract: Step 2: Identify the performance obligation(s): Step 3: Determine the transaction price: Step 4: Allocate the…
Cullumber Company sells goods on credit that cost $306,500 to Gary Company for $400,500 on January 2, 2025. The sales price includes an installation fee, which has a standalone selling price of $47,000. The standalone selling price of the goods is $353,500. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Jan. 2, 2025 Account Titles and Explanation Debit Credit
VolleyElite runs a volleyball program consisting of camps, tournaments, and specialized coaching. VolleyElite charges customers 500 per year for access to its facilities and programs. In addition, VolleyElite charges each customer a 100 registration fee. The fee is not refundable and must be paid at the initiation of the contract. Should the registration fee be considered a separate performance obligation from the yearly dues?
Markson and Sons leases a copy machine with terms that include a fixed fee each month of $500 plus a charge for each copy made. The company uses the high-low method to analyze costs. If Markson paid $360 for 5,000 copies and $280 for 3,000 copies, how much would Markson pay if it made 7,500 copies?
Allocating Transaction Price to Performance Obligations and Recording Sales Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned. a. How should the transaction price be allocated among the performance obligation(s)?Note: Round each allocated transaction price in the table below to the nearest dollar. Performance Obligations TransactionPriceas Stated StandaloneSellingPrice AllocatedTransaction Price(rounded) Product purchase Answer Answer Answer Loyalty rewards Answer Answer Answer Answer Answer Answer b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400…
An full-service technology company provides equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. A Customer purchased computer equipment, installation and training for a total cost of P150,000 on May 22, 2021. Estimated stand alone selling price of the equipment, training and installation are P100,000, P90,000 and P60,000 respectively. How much is the transaction price allocated to the installation?
Engelhart Implements Inc. sells tractors to area farmers. The price for each tractor includes GPS positioning service for 9 months (which facilitates field settings for planting and harvesting equipment). The GPS service is regularly sold on a standalone basis by Engelhart for a monthly fee. After the 9-month period, the consumer can renew the service on a fee basis How many performance obligations exist in this contract? Select one: а. More than three performances O b. Three performances C. One performance d. Two performances O O D |l>
Allocating Transaction Price to Performance Obligations and Recording Sales Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $196) for cash at the usual selling price of $280 and earns 280 points redeemable for $56 off future purchases of goods or services. The retailer expects redemption of 252 points or 90% of points earned. Required a. How should the transaction price be allocated among the performance obligation(s)? *Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Performance Obligations Product purchase s Loyalty rewards Total Transaction Price as stated Account Name To record sale of product. 280 ✔ S To record cost of sale of product. 280 S b. Prepare Maximum's journal entry to record the $280 sale to the customer and the cost of that sale where the customer earned 280 loyalty points. *Note: If a…
Sirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded every second month to the radio, and continuous music service for one year from the date the hardware is delivered.Required:Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column with "Not affected".