Textbook Problem

Luke’s Gameday Company sells a package of goods and services to its customers. The package includes four FCS Championship football tickets, a reserved parking space, a pregame party, and four pregame sideline passes. The package sells for $18,000. Because the stand-alone selling for the pregame party and sideline passes is not observable, Luke’s Gameday Company is interested in determining how to allocate the transaction price to each underlying performance obligation.

Required:

Discuss what methods are available for estimating a stand-alone selling price for a good or service when the stand-alone selling price is not directly observable. Which method is preferred?