Riverbed Company manufactures equipment. Riverbed'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. Riverbed has the following arrangement with Winkerbean Inc. Winkerbean purchases equipment from Riverbed for a price of $ 1,100,000 and contracts with Riverbed to install the equipment. Riverbed charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Riverbed determines installation service is estimated to have a standalone selling price of $ 46,000. The cost of the equipment is $ 580,000. Winkerbean is obligated to pay Riverbed the $ 1,100,000 upon the delivery and installation of the equipment. Riverbed delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. The equipment has auseful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately.
Riverbed Company manufactures equipment. Riverbed'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. Riverbed has the following arrangement with Winkerbean Inc. Winkerbean purchases equipment from Riverbed for a price of $ 1,100,000 and contracts with Riverbed to install the equipment. Riverbed charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Riverbed determines installation service is estimated to have a standalone selling price of $ 46,000. The cost of the equipment is $ 580,000. Winkerbean is obligated to pay Riverbed the $ 1,100,000 upon the delivery and installation of the equipment. Riverbed delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. The equipment has auseful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 65P: Mantenga Company provides routine maintenance services for heavy moving and transportation vehicles....
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Riverbed Company manufactures equipment. Riverbed'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. Riverbed has the following arrangement with
Winkerbean Inc.
Winkerbean purchases equipment from Riverbed for a price of $ 1,100,000 and contracts with Riverbed to install the
equipment. Riverbed charges the same price for the equipment irrespective of whether it does the installation or not. Using
market data, Riverbed determines installation service is estimated to have a standalone selling price of $ 46,000. The cost of
the equipment is $580,000.
Winkerbean is obligated to pay Riverbed the $ 1,100,000 upon the delivery and installation of the equipment.
Riverbed delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. The
equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations
which should be accounted for separately.
(a)
X Your answer is incorrect.
How should the transaction price of $ 1,100,000 be allocated among the service obligations? (Do not round intermediate
calculations. Round final answers to 0 decimal places.)
Equipment
%24
1057833
Installation
%24
42167
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