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transaction price be allocated.

transaction price be allocated.

FINANCIAL ACCOUNTING
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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Software Supplier Inc. sells to a customer a perpetual software license and post-contract customer support for a 12-month period, commencing at the time that the software is activated. Software Supplier Inc. charges $240 upfront when the software is purchased and $16 a month for 12 months, due at the end of the month. Software Supplier Inc. sells the software separately for $320 while the standalone selling price of the post-contract customer support is $160. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). a. How should the transaction price be allocated among the performance obligation(s)? Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) Software Customer support $ $ Account Name To record sale of software. < < < << < S b. Prepare Software Supplier's journal entry to record sale of software to the customer and the entry for the first monthly payment. To record first monthly payment from customer. OS Dr. $ Cr. 0 $ 0
Transcribed Image Text:Software Supplier Inc. sells to a customer a perpetual software license and post-contract customer support for a 12-month period, commencing at the time that the software is activated. Software Supplier Inc. charges $240 upfront when the software is purchased and $16 a month for 12 months, due at the end of the month. Software Supplier Inc. sells the software separately for $320 while the standalone selling price of the post-contract customer support is $160. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). a. How should the transaction price be allocated among the performance obligation(s)? Performance Obligations Transaction Price as Stated Standalone Selling Price Allocated Transaction Price (rounded) Software Customer support $ $ Account Name To record sale of software. < < < << < S b. Prepare Software Supplier's journal entry to record sale of software to the customer and the entry for the first monthly payment. To record first monthly payment from customer. OS Dr. $ Cr. 0 $ 0
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