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Allocating Transaction Price to Performance Obligations and Recording Sales Value Dealership Inc. markets and sells 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 $60,000 and the standalone selling price for the annual maintenance contract is $1,224. During October, Value Dealership Inc. sold 60 vehicles for $60.500 per vehicle, each with a free annual maintenance contract. Note: Carry all decimals in calculations: round the final answer to the nearest dollar. *Note: If 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. answer blank (zero). a. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles with the associated maintenance contracts to customers. Ignore the cost entry. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle Annual maintenance contract $ Account Name To recard the sale of vehicles with associated maintenance contracts. Account Name S DS V Dr. b. Assume the same information above except that the standalone selling price of the annual maintenance contract is not known because this was the first time Value Dealership offered the service. Value Dealership is uncertain as to what services, on average, a customer will take advantage of during the year of the contract. The Dealership researched competitor prices and determined that the average selling price for a maintenance service contract is $1,280. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles to its customers. Ignore the cost entry. Dr. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle Annual maintenance contract $ $ Cr. Os Cr. S OS 0

Allocating Transaction Price to Performance Obligations and Recording Sales Value Dealership Inc. markets and sells 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 $60,000 and the standalone selling price for the annual maintenance contract is $1,224. During October, Value Dealership Inc. sold 60 vehicles for $60.500 per vehicle, each with a free annual maintenance contract. Note: Carry all decimals in calculations: round the final answer to the nearest dollar. *Note: If 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. answer blank (zero). a. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles with the associated maintenance contracts to customers. Ignore the cost entry. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle Annual maintenance contract $ Account Name To recard the sale of vehicles with associated maintenance contracts. Account Name S DS V Dr. b. Assume the same information above except that the standalone selling price of the annual maintenance contract is not known because this was the first time Value Dealership offered the service. Value Dealership is uncertain as to what services, on average, a customer will take advantage of during the year of the contract. The Dealership researched competitor prices and determined that the average selling price for a maintenance service contract is $1,280. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles to its customers. Ignore the cost entry. Dr. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle Annual maintenance contract $ $ Cr. Os Cr. S OS 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Allocating Transaction Price to Performance Obligations and Recording Sales Value Dealership Inc. markets and sells 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 $60,000 and the standalone selling price for the annual maintenance contract is $1,224. During October, Value Dealership Inc. sold 60 vehicles for $60.500 per vehicle, each with a free annual maintenance contract. Note: Carry all decimals in calculations: round the final answer to the nearest dollar.. Note: If 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. answer blank (zero), a. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles with the associated maintenance contracts to customers. Ignore the cost entry. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle $ Annual maintenance contract $ S Account Name Account Name To record the sale of vehicles with associated maintenance contracts. $ $ S OS To record the sale of vehicles. b. Assume the same information above except that the standalone selling price of the annual maintenance contract is not known because this was the first time Value Dealership offered the service. Value Dealership is uncertain as to what services, on average, a customer will take advantage of during the year of the contract. The Dealership researched competitor prices and determined that the average selling price for a maintenance service contract is $1,280. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles to its customers. Ignore the cost entry. Dr. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle Annual maintenance contract $ Dr. 05 OS Cr. Cr. $ D OS
Transcribed Image Text:Allocating Transaction Price to Performance Obligations and Recording Sales Value Dealership Inc. markets and sells 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 $60,000 and the standalone selling price for the annual maintenance contract is $1,224. During October, Value Dealership Inc. sold 60 vehicles for $60.500 per vehicle, each with a free annual maintenance contract. Note: Carry all decimals in calculations: round the final answer to the nearest dollar.. Note: If 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. answer blank (zero), a. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles with the associated maintenance contracts to customers. Ignore the cost entry. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle $ Annual maintenance contract $ S Account Name Account Name To record the sale of vehicles with associated maintenance contracts. $ $ S OS To record the sale of vehicles. b. Assume the same information above except that the standalone selling price of the annual maintenance contract is not known because this was the first time Value Dealership offered the service. Value Dealership is uncertain as to what services, on average, a customer will take advantage of during the year of the contract. The Dealership researched competitor prices and determined that the average selling price for a maintenance service contract is $1,280. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 60 vehicles to its customers. Ignore the cost entry. Dr. Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) One Vehicle Annual maintenance contract $ Dr. 05 OS Cr. Cr. $ D OS
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