Sheridan Company manufactures equipment. Sheridan's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $255,000 to $1,680,000, and are quoted inclusive of installation. The Installation process does not involve changes to the features of the equipment to perform to specifications. Sheridan has the following arrangement with Splish Inc. Splish purchases equipment from Sheridan on May 2, 2023, for a price of $1,056,000 and contracts with Sheridan to install the equipment. Sherid charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Sheridan determines that the installation service is estimated to have a fair value of $44,000. The cost of the equipment is $700,000. Splish is obligated to pay Sheridan the $1,012.000 on delivery of the equipment and the balance on the completion of the installation. Sheridan delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately.

Sheridan Company manufactures equipment. Sheridan's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $255,000 to $1,680,000, and are quoted inclusive of installation. The Installation process does not involve changes to the features of the equipment to perform to specifications. Sheridan has the following arrangement with Splish Inc. Splish purchases equipment from Sheridan on May 2, 2023, for a price of $1,056,000 and contracts with Sheridan to install the equipment. Sherid charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Sheridan determines that the installation service is estimated to have a fair value of $44,000. The cost of the equipment is $700,000. Splish is obligated to pay Sheridan the $1,012.000 on delivery of the equipment and the balance on the completion of the installation. Sheridan delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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