GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells the FB7 model for $62,000, and this price includes one year of secure parking storage. GameDay also sell secure parking storage separately for $8,000 per year, and customers can purchase the FB7 model without secure parking storage for $60,000. If a customer purchases the FB7 model with secure parking storage, how should GameDay allocate the transaction price?
Trending nowThis is a popular solution!
Chapter 17 Solutions
Intermediate Accounting: Reporting And Analysis
Additional Business Textbook Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Cost Accounting (15th Edition)
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Financial Accounting, Student Value Edition (5th Edition)
Fundamentals Of Cost Accounting (6th Edition)
Principles Of Taxation For Business And Investment Planning 2020 Edition
- CoolShoes sells its elite tennis shoes to sports retailers throughout the country. When introducing its new RF17 shoes that sell for 125 per pair, the company includes a 15 rebate form. The rebate form can be used when the customer ultimately purchases the shoes. CoolShoes sells 100 pairs of shoes and estimates that 80% of the rebate forms will be returned by customers for a rebate. Determine the transaction price that CoolShoes should use when recognizing revenue from sale of one pair of the RF17 shoe.arrow_forwardThe list price of a secondhand van was P300,000 at a local car dealership. However, a customer convinced the dealer to sell the van for P250,000 (the van had cost the dealer P200,000). The amount of revenue that would be recognized as a result of the sale is:arrow_forwardLeo Consulting enters into a contract with Highgate University to restructure Highgate’s processes for purchasing goods from suppliers. The contract states that Leo will earn a fixed fee of $66,000 and earn an additional $13,000 if Highgate achieves $130,000 of cost savings. Leo estimates a 70% chance that Highgate will achieve $130,000 of cost savings. Assuming that Leo determines the transaction price as the expected value of expected consideration, what transaction price will Leo estimate for this contract? Transaction price for the contract ?arrow_forward
- Luke Consulting enters into a contract with Holand University to restructure Holand's processes for purchasing goods from suppliers. The contract states that Luke will earn a fixed fee of 25000 and earn an additional 10000 if Holand achieves 100000 cost of savings. Luke estimates a 50% chance that Holand will 100000 of cost of savings. Assuming that Luke determines the transaction price as the expected value of expected consideration, what transaction price will Luke estimate for this contract?arrow_forwardAn auto dealership is advertising that a new car with a sticker price of $33,408 is on sale for $25,995 if payment is made in full, or it can be financed at 0% interest for 72 months with a monthly payment of $464. Note that 72 payments × $464 per payment = $33,408, which is the sticker price of the car. By allowing you to pay for the car in a series of payments (starting one month from now) rather than $25,995 now, the dealer is effectively loaning you $25,995. If you choose the 0% financing option, what is the effective interest rate that the auto dealership is earning on your loan? (Hint: Discount the payments back to current dollars, and use Goal Seek to find the discount rate that makes the net present value of the payments = $25,995.) Enter your answer as a percentage. If required, round your answer to one decimal digit.arrow_forwardAn auto dealership is advertising that a new car with a sticker price of $33,768 is on sale for $25,995 if payment is made in full, or it can be financed at 0% interest for 72 months with a monthly payment of $469. Note that 72 payments × $469 per payment = $33,768, which is the sticker price of the car. By allowing you to pay for the car in a series of payments (starting one month from now) rather than $25,995 now, the dealer is effectively loaning you $25,995. If you choose the 0% financing option, what is the effective interest rate that the auto dealership is earning on your loan? (Hint: Discount the payments back to current dollars, and use Goal Seek to find the discount rate that makes the net present value of the payments = $25,995.)arrow_forward
- A company is currently paying a sales representative $0.50 per mile to drive her car for company business. The company is considering supplying the representative with a car, which would involve the following:Option l: Continue to pay at the rate of 50 cents per mile.Option 2: Provide a company vehicle to the sales representative. A car costs$24,000 and has a service life of five years and a market value of $7,000 atthe end of that time. The cost of keeping the car in the garage during the off-hours amounts to $2,500 a year, and the cost of fuel, tires, and maintenance is 30 cents per mile. The car will be depreciated by MACRS using a recovery period of five years (20%, 32%, 19.20%, 11.52%, 11.52%).The firm's marginal tax rate is 40%. What annual mileage must the sales representative travel by car for the cost of the two options of providing transportation to be equal if the interest rate is 15%?(a) 36,345 miles (b) 41,235 miles (c) 45,233 miles (d) 47,518 milesarrow_forwardGood-Deal Auto developed a new sales gimmick to help sell its inventory of new automobiles.Because many new car buyers need financing, Good-Deal offered a low down payment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers.On January 1, 2019, a customer purchased a new €33,000 automobile, making a down payment of €1,000. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Good-Deal required a €400 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2020. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1,2022.Instructionsa. Prepare a note amortization schedule for the first yearb. Indicate the amount the customer owes on the contract at the end of the first yearc. Compute the amount of the new quarterly…arrow_forwardGood-Deal Auto developed a new sales gimmick to help sell its inventory of new automobiles.Because many new car buyers need financing, Good-Deal offered a low down payment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers.On January 1, 2019, a customer purchased a new €33,000 automobile, making a down payment of €1,000. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Good-Deal required a €400 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2020. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1,2022.Instructionsa. Prepare a note amortization schedule for the first yearc. Prepare a note amortization schedule for these new payments for the next 2 yearsd. What do you think of the new sales promotion used…arrow_forward
- Sisters Company specializes in selling and installing upscale home theater systems. On April 1, 2021, Sisters sold a premium home theater package that includes a projector, set of surround speakers, and high quality leather seats, along with complete installation service, for $32,500. If sold separately, each of these goods or services would have cost $15,000 (projector), $12,500 (speakers), $17,500 (seats), and $3,000 (installation), respectively. Required: How much of the transaction price would be allocated to the projector, the speakers, the leather seats, and the installation service, assuming that each of these four parts of the contract is a separate performance obligation? Show your work.arrow_forwardAn auto dealership is running a promotional deal whereby they will replace your tires free of charge for the life of the vehicle when you purchase your car from them. You expect the original tires to last for 30,000 miles, and then they will need replacement every 30,000 miles thereafter. Your driving mileage averages 15,000 miles per year. A set of new tires costs $400. If you trade in the car at 150,000 miles with new tires then, what is the lump-sum present value of this deal if your personal interest rate is 12% per year?arrow_forwardFlint Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms. 1. Flint Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $481. The standalone selling price of the tablet is $225 (the cost to Flint Company is $174). Flint Company sells the Internet access service independently for an upfront payment of $308. On January 2, 2020, Flint Company signed 100 contracts, receiving a total of $48,100 in cash. 2. Flint Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $586. Flint Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $152. Flint…arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning