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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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%2F82c30eea-47c2-496e-83a0-43308aeccdb9%2Fa3ea0d5b-57aa-4d20-be24-d57ef4c93e56%2Fq71mh35_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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