Question: Buffalo Company manufactures equipment. Buffalo'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. Buffalo has the following arrangement with Winker bean Inc. • Winker bean purchases equipment from Buffalo for a price of $1,020,000 and contracts with Buffalo to install the equipment. Buffalo charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Buffalo determines installation service is estimated to have a standalone selling price of $45,000. The cost of the equipment is $560,000.
Question: Buffalo Company manufactures equipment. Buffalo'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. Buffalo has the following arrangement with Winker bean Inc. • Winker bean purchases equipment from Buffalo for a price of $1,020,000 and contracts with Buffalo to install the equipment. Buffalo charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Buffalo determines installation service is estimated to have a standalone selling price of $45,000. The cost of the equipment is $560,000.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 60P: Ostrich Company makes gasoline storage tanks. Everything produced is under contract (that is, the...
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