Blossom Company manufactures products ranging 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. Blossom has the following arrangement with Sheridan Inc. ● Sheridan purchases equipment from Blossom for a price of $926,400 and contracts with Blossom to install the equipment. Blossom charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Blossom determines installation service is estimated to have a standalone selling price of $38,600. The cost of the equipment is $640,000. Sheridan is obligated to pay Blossom the $926,400 upon the delivery of the equipment. Blossom delivers the equipment on June 1, 2025, and completes the installation of the equipment on September 30, 2025. 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) How should the transaction price of $926,400 be allocated among the performance obligations? (Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.) Equipment $ Installation $
Blossom Company manufactures products ranging 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. Blossom has the following arrangement with Sheridan Inc. ● Sheridan purchases equipment from Blossom for a price of $926,400 and contracts with Blossom to install the equipment. Blossom charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Blossom determines installation service is estimated to have a standalone selling price of $38,600. The cost of the equipment is $640,000. Sheridan is obligated to pay Blossom the $926,400 upon the delivery of the equipment. Blossom delivers the equipment on June 1, 2025, and completes the installation of the equipment on September 30, 2025. 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) How should the transaction price of $926,400 be allocated among the performance obligations? (Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.) Equipment $ Installation $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Blossom Company manufactures products ranging 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. Blossom has the following arrangement with Sheridan Inc.
Sheridan purchases equipment from Blossom for a price of $926,400 and contracts with Blossom to install the equipment.
Blossom charges the same price for the equipment irrespective of whether it does the installation or not. Using market data,
Blossom determines installation service is estimated to have a standalone selling price of $38,600. The cost of the equipment
is $640,000.
Sheridan is obligated to pay Blossom the $926,400 upon the delivery of the equipment.
Blossom delivers the equipment on June 1, 2025, and completes the installation of the equipment on September 30, 2025. 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)
How should the transaction price of $926,400 be allocated among the performance obligations? (Do not round intermediate
calculations. Round final answers to 0 decimal places, e.g. 5,275.)
Equipment $
Installation $
eTextbook and Media
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
Transcribed Image Text:Prepare the journal entries for Blossom for this revenue arrangement on June 1, 2025 and September 30, 2025, assuming
Blossom receives payment when installation is completed. (Credit account titles are automatically indented when the
amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter
O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the
problem. Round answers to 0 decimal places, e.g. 5,275.)
Date
Account Titles and Explanation
(To record sales)
(To record cost of goods sold)
Debit
|||||
Cred
Solution
by Bartleby ExpertKnowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education