Crane Company manufactures products ranging from simple automated machinery to components. Unit selling prices range from $200,000 to $1,500,000 and are quoted i does not involve changes to the features of the equipment and does not require prop for the installed equipment to perform to specifications. Crane has the following arra Windsor purchases equipment from Crane for a price of $1,026,000 and contr charges the same price for the equipment irrespective of whether it does the i determines installation service is estimated to have a standalone selling price $570,000.
Crane Company manufactures products ranging from simple automated machinery to components. Unit selling prices range from $200,000 to $1,500,000 and are quoted i does not involve changes to the features of the equipment and does not require prop for the installed equipment to perform to specifications. Crane has the following arra Windsor purchases equipment from Crane for a price of $1,026,000 and contr charges the same price for the equipment irrespective of whether it does the i determines installation service is estimated to have a standalone selling price $570,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crane 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. Crane has the following arrangement with Windsor Inc.
●
●
Windsor purchases equipment from Crane for a price of $1,026,000 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. Using market data, Crane
determines installation service is estimated to have a standalone selling price of $54,000. The cost of the equipment is
$570,000.
Windsor is obligated to pay Crane the $1,026,000 upon the delivery of the equipment.
Crane 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 $1,026,000 be allocated among the performance obligations? (Do not round intermediate
calculations. Round final answers to O decimal places, e.g. 5,275.)
Equipment $
Installation $
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