Pearl Centre is an experienced home appliance dealer. Pearl Centre also offers a number of services together with the home appliances that it sells. Assume that Pearl Centre sells ovens on a stand-alone basis. Pearl Centre also sells installation services and maintenance services for ovens. However, Pearl Centre does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only Oven with installation service Oven with maintenance services Oven with installation and maintenance services (b) Oven In each instance in which maintenance services are provided, service is separately priced within the arrangement at $145. Additionally, the incremental amount charged by Pearl Centre for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Pearl Centre does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $1,218. Assume that a customer purchases an oven with both installation and maintenance services for $1,400. Installation $ $1,218 Assume that a customer purchases an oven with both installation and maintenance services for $1,400. Allocate the transaction price of $1,400 among the performance obligations of the contract. (Round percentage allocations to 2 decimal places, e.g. 12.25 and final answers to O decimal places, e.g. 5,275.) $ 1.305 Maintenance $ 1,363 1,400
Pearl Centre is an experienced home appliance dealer. Pearl Centre also offers a number of services together with the home appliances that it sells. Assume that Pearl Centre sells ovens on a stand-alone basis. Pearl Centre also sells installation services and maintenance services for ovens. However, Pearl Centre does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only Oven with installation service Oven with maintenance services Oven with installation and maintenance services (b) Oven In each instance in which maintenance services are provided, service is separately priced within the arrangement at $145. Additionally, the incremental amount charged by Pearl Centre for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Pearl Centre does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $1,218. Assume that a customer purchases an oven with both installation and maintenance services for $1,400. Installation $ $1,218 Assume that a customer purchases an oven with both installation and maintenance services for $1,400. Allocate the transaction price of $1,400 among the performance obligations of the contract. (Round percentage allocations to 2 decimal places, e.g. 12.25 and final answers to O decimal places, e.g. 5,275.) $ 1.305 Maintenance $ 1,363 1,400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Pearl Centre is an experienced home appliance dealer. Pearl Centre also offers a number of services together with the home appliances that it sells. Assume that Pearl Centre sells ovens on a stand-alone
basis. Pearl Centre also sells installation services and maintenance services for ovens. However, Pearl Centre does not offer installation or maintenance services to customers who buy ovens from other
vendors. Pricing for ovens is as follows.
Oven only
Oven with installation service
Oven with maintenance services
Oven with installation and maintenance services
(b)
Oven
In each instance in which maintenance services are provided, service is separately priced within the arrangement at $145. Additionally, the incremental amount charged by Pearl Centre for installation
approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the
event Pearl Centre does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $1,218. Assume that a customer purchases an oven with both
installation maint hance services for $1,400.
Installation
$
$ 1,218
Assume that a customer purchases an oven with both installation and maintenance services for $1,400. Allocate the transaction price of $1,400 among the performance obligations of the contract. (Round
percentage allocations to 2 decimal places, e.g. 12.25 and final answers to O decimal places, e.g. 5,275.)
$
1,305
Maintenance $
1,363
1,400
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