Surfside Ltd is marketing a surfing bundle in which, for $1100, it provides customers with a surfboard (which retails separately for $850), a wetsuit (which retails separately for $250), and five lessons (which retail for $200). You are required to determine: Whether separate performance obligations exist, and to explain why you made this judgement. How much of the transaction price to allocate to each performance obligation?

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
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Surfside Ltd is marketing a surfing bundle in which, for $1100, it provides customers with a surfboard (which retails separately for $850), a wetsuit (which retails separately for $250), and five lessons (which retail for $200). You are required to determine:

  1. Whether separate performance obligations exist, and to explain why you made this judgement.
  2. How much of the transaction price to allocate to each performance obligation?
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