Creative Computing sells a tablet computer called the Protab. The $970 sales price of a Protab Package includes the following: • One Protab computer. • A six-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. • A coupon to purchase a Creative Probook e-book reader for $250, a price that represents a 50% discount from the regular Probook price of $500. It is expected that 20% of the discount coupons will be utilized. • A coupon to purchase a one-year extended warranty for $60. Customers can buy the extended warranty for $60 at other times as well. Creative estimates that 30% of customers will purchase an extended warranty. • Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $950. All Protab sales are made in cash.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Req 1 and 2
Req 3
Indicated below whether each item is a separate performance obligation and allocate the transaction price of 80,000 Protab
Packages to the separate performance obligations in the contract.
Item Description
Protab computers
Limited six-month warranty
Option to purchase a Probook
Option to purchase extended warranty
Total stand alone price
Item Description
Protab computers
Limited six-month warranty
Option to purchase a Probook
Option to purchase extended warranty
Total contract price
Performance
Obligation?
Percentage of
Total Stand-
Alone Price
X
Stand-Alone Price
$
Total Transaction
Price
0
=
Percentage of Total
Stand-Alone Price
Allocated Contract
$
0
0
0
0
0%
Price
0
Transcribed Image Text:Req 1 and 2 Req 3 Indicated below whether each item is a separate performance obligation and allocate the transaction price of 80,000 Protab Packages to the separate performance obligations in the contract. Item Description Protab computers Limited six-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand alone price Item Description Protab computers Limited six-month warranty Option to purchase a Probook Option to purchase extended warranty Total contract price Performance Obligation? Percentage of Total Stand- Alone Price X Stand-Alone Price $ Total Transaction Price 0 = Percentage of Total Stand-Alone Price Allocated Contract $ 0 0 0 0 0% Price 0
Creative Computing sells a tablet computer called the Protab. The $970 sales price of a Protab Package includes the following:
• One Protab computer.
●
A six-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements
associated with defective products for up to six months.
• A coupon to purchase a Creative Probook e-book reader for $250, a price that represents a 50% discount from the regular Probook
price of $500. It is expected that 20% of the discount coupons will be utilized.
• A coupon to purchase a one-year extended warranty for $60. Customers can buy the extended warranty for $60 at other times as
well. Creative estimates that 30% of customers will purchase an extended warranty.
• Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an
extended warranty, but estimates that if it did so, a Protab alone would sell for $950.
All Protab sales are made in cash.
Transcribed Image Text:Creative Computing sells a tablet computer called the Protab. The $970 sales price of a Protab Package includes the following: • One Protab computer. ● A six-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. • A coupon to purchase a Creative Probook e-book reader for $250, a price that represents a 50% discount from the regular Probook price of $500. It is expected that 20% of the discount coupons will be utilized. • A coupon to purchase a one-year extended warranty for $60. Customers can buy the extended warranty for $60 at other times as well. Creative estimates that 30% of customers will purchase an extended warranty. • Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $950. All Protab sales are made in cash.
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