Wilco Inc. sells a bundled product containing a calculator and a pencil for $10. The calculator is sold as a stand-alone item for $8 and the pencil is not sold as a stand-alone item. If Wilco recognizes revenue based on the residual approach, how much revenue would be allocated to the calculator?

Wilco Inc. sells a bundled product containing a calculator and a pencil for $10. The calculator is sold as a stand-alone item for $8 and the pencil is not sold as a stand-alone item. If Wilco recognizes revenue based on the residual approach, how much revenue would be allocated to the calculator?

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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Question

Owe

Wilco Inc. sells a bundled product containing a calculator and a pencil for $10. The calculator is
sold as a stand-alone item for $8 and the pencil is not sold as a stand-alone item. If Wilco
recognizes revenue based on the residual approach, how much revenue would be allocated to the
calculator?
$6.67
$8
O $4
$10

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Step 1: Definition of the residual approach to revenue recognition

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