Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $255,000 to $1,550,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following arrangement with Shamrock Inc. ● ● Shamrock purchases equipment from Crane on May 2, 2023, for a price of $1,065,000 and contracts with Crane to install the equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $700,000. (a) Shamrock is obligated to pay Crane the $1,009,000 on delivery of the equipment and the balance on the completion of the installation Crane delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately. Crane does not have market data from which to determine the stand-alone selling price of the installation services. As a result, an expected cost plus margin approach is used. The cost of installation is $35,500; Crane prices these services with a 25% margin relative to cost. X Your answer is incorrect. Allocate the transaction price of $1,065,000 among the performance obligations of the contract. Assume Crane follows IFRS. (Round percentage allocations to 2 decimal places, e.g. 12.25% and final answers to O decimal places, e.g. 5,275.) Delivery equipment $ Installation $ 65.73% 3.33%
Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $255,000 to $1,550,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following arrangement with Shamrock Inc. ● ● Shamrock purchases equipment from Crane on May 2, 2023, for a price of $1,065,000 and contracts with Crane to install the equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $700,000. (a) Shamrock is obligated to pay Crane the $1,009,000 on delivery of the equipment and the balance on the completion of the installation Crane delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately. Crane does not have market data from which to determine the stand-alone selling price of the installation services. As a result, an expected cost plus margin approach is used. The cost of installation is $35,500; Crane prices these services with a 25% margin relative to cost. X Your answer is incorrect. Allocate the transaction price of $1,065,000 among the performance obligations of the contract. Assume Crane follows IFRS. (Round percentage allocations to 2 decimal places, e.g. 12.25% and final answers to O decimal places, e.g. 5,275.) Delivery equipment $ Installation $ 65.73% 3.33%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing
numerous components. Unit selling prices range from $255,000 to $1,550,000, and are quoted inclusive of installation. The
installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following
arrangement with Shamrock Inc.
Shamrock purchases equipment from Crane on May 2, 2023, for a price of $1,065,000 and contracts with Crane to install the
equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. The cost of
the equipment is $700,000.
(a)
Shamrock is obligated to pay Crane the $1,009,000 on delivery of the equipment and the balance on the completion of the
installation
Crane delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that
the equipment and the installation are two distinct performance obligations that should be accounted for separately. Crane does not
have market data from which to determine the stand-alone selling price of the installation services. As a result, an expected cost plus
margin approach is used. The cost of installation is $35,500; Crane prices these services with a 25% margin relative to cost.
X
* Your answer is incorrect.
Allocate the transaction price of $1,065,000 among the performance obligations of the contract. Assume Crane follows IFRS.
(Round percentage allocations to 2 decimal places, e.g. 12.25% and final answers to O decimal places, e.g. 5,275.)
Delivery equipment $
Installation
$
65.73%
3.33%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 4 images
Knowledge 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