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Current Attempt in Progress Carla Vista Co. enters into a contract to sell Product A and Product B on January 2, 2023, for an upfront cash payment of $170,000. Product A will be delivered in two years (January 2, 2025) and Product B will be delivered in five years (January 2, 2028). Carla Vista allocates the $170,000 to Products A and B on a relative stand-alone selling price basis as follows. Stand-Alone Selling Prices Percentage Allocated Allocated Amounts Product A $36,000 20% $34,000 Product B 144,000 80% 136,000 $180,000 $170,000 Carla Vista uses an interest rate of 5%, which is its incremental borrowing rate.

Current Attempt in Progress Carla Vista Co. enters into a contract to sell Product A and Product B on January 2, 2023, for an upfront cash payment of $170,000. Product A will be delivered in two years (January 2, 2025) and Product B will be delivered in five years (January 2, 2028). Carla Vista allocates the $170,000 to Products A and B on a relative stand-alone selling price basis as follows. Stand-Alone Selling Prices Percentage Allocated Allocated Amounts Product A $36,000 20% $34,000 Product B 144,000 80% 136,000 $180,000 $170,000 Carla Vista uses an interest rate of 5%, which is its incremental borrowing rate.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Current Attempt in Progress Carla Vista Co. enters into a contract to sell Product A and Product B on January 2, 2023, for an upfront cash payment of $170,000. Product A will be delivered in two years (January 2, 2025) and Product B will be delivered in five years (January 2, 2028). Carla Vista allocates the $170,000 to Products A and B on a relative stand-alone selling price basis as follows. Stand-Alone Selling Prices Percentage Allocated Allocated Amounts Product A $36,000 20% $34,000 Product B 144,000 80% 136,000 $180,000 $170,000 Carla Vista uses an interest rate of 5%, which is its incremental borrowing rate.
Transcribed Image Text:Current Attempt in Progress Carla Vista Co. enters into a contract to sell Product A and Product B on January 2, 2023, for an upfront cash payment of $170,000. Product A will be delivered in two years (January 2, 2025) and Product B will be delivered in five years (January 2, 2028). Carla Vista allocates the $170,000 to Products A and B on a relative stand-alone selling price basis as follows. Stand-Alone Selling Prices Percentage Allocated Allocated Amounts Product A $36,000 20% $34,000 Product B 144,000 80% 136,000 $180,000 $170,000 Carla Vista uses an interest rate of 5%, which is its incremental borrowing rate.
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