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Allocating Transaction Price to Performance Obligations and Recording Sales Software Supplier Inc. sells to a customer a perpetual software license and post-contract customer support for a 12-month period, commencing at the time that the software is activated. Software Supplier Inc. charges $360 upfront when the software is purchased and $24 a month for 12 months, due at the end of the month. Software Supplier Inc. sells the software separately for $480 while the standalone selling price of the post-contract customer support is $240. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). a. How should the transaction price be allocated among the performance obligation(s)? Performance Obligations Software Customer support Transaction Price as Stated Standalone Selling Price…

Allocating Transaction Price to Performance Obligations and Recording Sales Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned.   a. How should the transaction price be allocated among the performance obligation(s)?Note: Round each allocated transaction price in the table below to the nearest dollar. Performance Obligations TransactionPriceas Stated StandaloneSellingPrice AllocatedTransaction Price(rounded) Product purchase Answer   Answer   Answer   Loyalty rewards Answer   Answer   Answer     Answer   Answer   Answer   b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400…

A company separately sells home security equipment and 12 months of system monitoring service for $120 and $240, respectively. The company sells an equipment/monitoring bundle on January 1 for a total price of $270. The monitoring service begins immediately after the equipment is delivered and installed on January 1.   Required: Determine the dollars of revenue that should be allocated to the equipment for each bundled sale. Determine the dollars of revenue that should be allocated to the service for each bundled sale. Determine the dollars of Sales Revenue and Service Revenue from the January 1 bundled sale that should be reported in the income statement for the period January 1–31.

Allocating Transaction Price to Performance Obligations and Recording Sales Value Dealership Inc. markets and sells the vehicles to retail customers. Along with a new vehicle purchase, a customer will receive a free annual maintenance contract for one year from the date of purchase. The standalone selling price of a vehicle is $30,000 and the standalone selling price for the annual maintenance contract is $400. During October 2020, Value Dealership Inc. sold 30 vehicles for $30,250 per vehicle, each with a free annual maintenance contract. When answering the following questions: Round each allocated transaction price to the nearest dollar. If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero). a. Ignoring the cost entries, record the journal entry in October 2020 for Value Dealership’s sale of vehicles with the associated maintenance contracts to customers.…

Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on physical units (that is, the number of individual units of product sold per bundle).

Sell4U is an online site that allows its clients to post items for sale. Sell4U charges a 5% brokerage fee for use of the site, payable within 10 days of the sale. As an agent, Sell4U may recognize revenue for the brokerage fee as soon as an item is sold.   True or False

With the goal of attracting as much customers as possible in the CALABARZON, Jhet Company engaged in a customer satisfaction program and marketing strategy for two of their major lines of products: (1) electrical appliances and (2) household and office furniture. All branches in the region are participating in the company’s promotions. In the customer satisfaction program, Jhet provides one-year warranty replacement of parts and labor of the electrical appliances sold. Based on past experience, the estimated warranty cost is 3% of sales. During 2021, total sales of electrical appliances was ₱7,200,000. Replacement parts and labor for warranty work totaled ₱184,000 during 2021. In the company’s marketing strategy for the household and office furniture section, customers are given a coupon for every ₱1,000 spent on these items. Customers may exchange 10 coupons plus ₱500 for a “hot and cold” water dispenser. Each water dispenser cost ₱1,200 and estimates that 40% of the coupons given to…

Describe the revenue recognition policy that the company should follow: Comfort Furniture sells household furniture. Customers can pay for the furniture at the time of delivery or they can wait one year to make payment. In the latter case, the customer must pay for the retail price of the furniture plus an additional 16 percent. If the customer decides to pay after one year, should Comfort Furniture report the additional 16 percent as part of the revenue from selling the furniture or should it be reported separately? Assume that the ability to collect the receivable is not an issue.

Ginger Ltd is marketing a ‘surfing bundle’ in which, for $2200, it provides customers with a surfboard(which retails separately for $1700), a wetsuit (which retails separately for $500) and five lessons(which retail separately for $400). You are required to determine:a) Whether separate performance obligations exist, and to explain why you made thisjudgement.b) How much of the transaction price to allocate to each performance obligation?

can you please explain how to recognize the revenue if you have the information below using IFRS The A company sells copy machine at a sales price of JPY1,500,000 per unit. The salesprice includes delivery and installation. It also gives a maintenance service (6 years) in which atechnician checks to make sure that the machine is working properly with a price of JPY500,000(one-time prepayment).The A company has started a promotion campaign in which the maintenance service (6years) will be offered for free to a client that buys a copy machine of JPY 1,728,000.The A company has made a contract to sell a copy machine with the maintenance service(6 years) to B company by JPY 1,728,000.

Q3. An entity sells 100 products for $100 each. Sales are made for cash, rather than on credit terms. The entity’s customary business practice is to allow a customer to return any unused product within 30 days and receive a full refund. The cost of each product is $60. To determine the transaction price, the entity decides that the approach that is most predictive of the amount of consideration to which the entity will be entitled is the most likely amount. Using the most likely amount, the entity estimates that three products will be returned. The entity’s experience is predictive of the amount of consideration to which the entity will be entitled. The entity estimates that the costs of recovering the products will be immaterial and expects that the returned products can be resold at a profit.REQUIREDProvide the accounting entries to record the sale, and the subsequent return of the assets, assuming that the returns occur in accordance with expectations.

Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which will affect the actual cost of asset being sold for the buyer and the seller. Consider this case: Green Moose Industries buys most of its raw materials from a single supplier. This supplier sells to Green Moose on terms of 1/10, net 30.   The cost per period of the trade credit extended to Green Moose is  ________(1.23%, 0.89%, 1.01%, 1.05%)   (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.).   Green Moose’s trade credit has a nominal annual cost of  _______ (22.85%, 19.17%, 16.59%, 18.43%) , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.)   If Green Moose Industries’s supplier shortens its discount period to five days, this will  _______ (Increase, Decrease) the cost of the trade credit.

CycleWorld sells motorcycles and also provides operating training and license testing. Training is $75 per hour, and testing is $125 per hour. How should it show license testing in its Service Item? Select an answer: as a separate category of Service Revenue as a separate level under Motorcycle Sales as a separate level under Service Revenue

Prairie Manufacturing has four possible​ suppliers, all of which offer different credit terms. Except for the differences in credit​ terms, their products and services are virtually identical. The credit terms offered by these suppliers are shown in the following​ table: LOADING... (Note​: Assume a​ 365-day year.)   Supplier     Credit terms       J          2/15 net 40 EOM      K         2/20 net 80 EOM      L          1/10 net 60 EOM      M         3/10 net 100 EOM   a. Calculate the approximate cost of giving up the cash discount from each supplier.   b. If the firm needs​ short-term funds, which are currently available from its commercial bank at 10​%, and if each of the suppliers is viewed separately​, ​which, if​ any, of the​ suppliers' cash discounts should the firm give​ up?     c. Now assume that the firm could stretch by 30 days its accounts payable​ (net period​ only) from supplier M. What​ impact, if​ any, would that have on your answer in part b relative to this​…