Company W sold services with a stand-alone fair value of $7,000 and equipment with a stand-alone fair value of $25,000 to Company X. Further, Company W provided payment terms such that no amounts are due for 366 days, at which time the full balance is due. The appropriate discount rate is 7%, which yields a contract price of $29,907. What is the amount of the price to allocate to the services portion? Answer: 23,364.84
Company W sold services with a stand-alone fair value of $7,000 and equipment with a stand-alone fair value of $25,000 to Company X. Further, Company W provided payment terms such that no amounts are due for 366 days, at which time the full balance is due. The appropriate discount rate is 7%, which yields a contract price of $29,907. What is the amount of the price to allocate to the services portion? Answer: 23,364.84
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![Company W sold services with a stand-alone fair value of $7,000 and equipment with a stand-alone fair
value of $25,000 to Company X. Further, Company W provided payment terms such that no amounts are
due for 366 days, at which time the full balance is due. The appropriate discount rate is 7%, which yields a
contract price of $29,907. What is the amount of the price to allocate to the services portion?
Answer:
23,364.84](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4533113e-069b-4e7d-b23b-da7079f58484%2F627556f6-59a0-41ba-9971-10e2f72eb8aa%2Fs3nldp6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Company W sold services with a stand-alone fair value of $7,000 and equipment with a stand-alone fair
value of $25,000 to Company X. Further, Company W provided payment terms such that no amounts are
due for 366 days, at which time the full balance is due. The appropriate discount rate is 7%, which yields a
contract price of $29,907. What is the amount of the price to allocate to the services portion?
Answer:
23,364.84
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