GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells the FB7 model for $62,000, and this price includes one year of secure parking storage. GameDay also sell secure parking storage separately for $8,000 per year, and customers can purchase the FB7 model without secure parking storage for $60,000. If a customer purchases the FB7 model with secure parking storage, how should GameDay allocate the transaction price?
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Chapter 17 Solutions
Intermediate Accounting: Reporting And Analysis
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- CoolShoes sells its elite tennis shoes to sports retailers throughout the country. When introducing its new RF17 shoes that sell for 125 per pair, the company includes a 15 rebate form. The rebate form can be used when the customer ultimately purchases the shoes. CoolShoes sells 100 pairs of shoes and estimates that 80% of the rebate forms will be returned by customers for a rebate. Determine the transaction price that CoolShoes should use when recognizing revenue from sale of one pair of the RF17 shoe.arrow_forwardLeo Consulting enters into a contract with Highgate University to restructure Highgate's processes for purchasing goods from suppliers. The contract states that Leo will earn a fixed fee of $80,000 and earn an additional $16,000 if Highgate achieves $160,000 of cost savings. Leo estimates a 50% chance that Highgate will achieve $160,000 of cost savings. Assuming that Leo determines the transaction price as the expected value of expected consideration, what transaction price will Leo estimate for this contract? Transaction price for the contractarrow_forwardCrane Company buys a delivery van with a list price of $55000. The dealer grants a 12% reduction in list price and an additional 1% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $750 and the company paid an extra $650 to have a special device installed. What should be the recorded cost of the van? O $49316. O $48666. O $47916. O $49302.arrow_forward
- (Allocate Transaction Price, Upfront Fees) Tablet Tailors sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms.1. Tablet Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $500. The standalone selling price of the tablet is $250 (the cost to Tablet Tailors is $175). Tablet Tailors sells the Internet access service independently for an upfront payment of $300. On January 2, 2017, Tablet Tailors signed 100 contracts, receiving a total of $50,000 in cash.2. Tablet Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $600. Tablet Tailors provides the 3-year tablet service plan as a separate product with a…arrow_forwardUse the information for the next three (3) questions. Seva Company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on purchases. Program members can redeem the points for further purchases. The points have no expiry date.During 2020, the customer earned 60,000 points. Management expects that 100% of these points will be redeemed. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price.On December 31, 2020, 28,800 points have been redeemed in exchange for purchases.In 2021, the management revised expectations and now expects 90% of the points to be redeemed. 9,000 points were redeemed during the year.How much of the sales should be allocated to the award points? How much should be recognized as revenue for 2020? How much should be recognized as revenue for 2021?arrow_forwardSur Travel Company intends to sell its customers a special round-trip airline ticket package to Salalah. The Company will be able to purchase the package from Oman Air for OMR 170 each. The round-trip tickets will be sold for OMR 200 each and the airline intends to reimburse Sur Travel for any unsold ticket packages. Fixed costs for Sur Travel ?include OMR 3,000 in advertising costs.How many ticket packages will Sur Travel need to sell to break even packages 100 a O packages 9 b O packages 18 .c O packages 15 .d Oarrow_forward
- Luke Consulting enters into a contract with Holand University to restructure Holand's processes for purchasing goods from suppliers. The contract states that Luke will earn a fixed fee of 25000 and earn an additional 10000 if Holand achieves 100000 cost of savings. Luke estimates a 50% chance that Holand will 100000 of cost of savings. Assuming that Luke determines the transaction price as the expected value of expected consideration, what transaction price will Luke estimate for this contract?arrow_forwardGood-Deal Auto developed a new sales gimmick to help sell its inventory of new automobiles.Because many new car buyers need financing, Good-Deal offered a low down payment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers.On January 1, 2019, a customer purchased a new €33,000 automobile, making a down payment of €1,000. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Good-Deal required a €400 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2020. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1,2022.Instructionsa. Prepare a note amortization schedule for the first yearb. Indicate the amount the customer owes on the contract at the end of the first yearc. Compute the amount of the new quarterly…arrow_forwardGood-Deal Auto developed a new sales gimmick to help sell its inventory of new automobiles.Because many new car buyers need financing, Good-Deal offered a low down payment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers.On January 1, 2019, a customer purchased a new €33,000 automobile, making a down payment of €1,000. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Good-Deal required a €400 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2020. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1,2022.Instructionsa. Prepare a note amortization schedule for the first yearc. Prepare a note amortization schedule for these new payments for the next 2 yearsd. What do you think of the new sales promotion used…arrow_forward
- Tablet Tailors sells tablet PCs combined with Internet service (Tablet Bundle A) that permits the tablet to connect to the Internet anywhere (that is, set up a WiFi hot spot). The price for the tablet and a four-year Internet connection service contract is $450. The stand-alone selling price of the tablet is $225 (cost to Tablet Tailors $158). Tablet Tailors sells the Internet access service independently for an upfront payment of $100, plus $65 payments due January 2, 2021, 2022, and 2023. With an imputed interest rate of 8%, the stand-alone value of the service is $268. On January 2, 2020, Tablet Tailors signed 100 contracts, receiving a total of $28,249 in cash (full payment of $450 each in cash, less the present value of the note for the future service plan payments due January 2 each year), delivered the tablets, and started service for 100 tablet packages. Tablet Tailors has a calendar year end and records adjusting entries at the end of the year. Instructions a. Allocate the…arrow_forwardA Sony 55-inch 3D Smart LED TV which has a cash price of $128,599 may be bought on hire purchase. To obtain the Smart TV on hire purchase, a deposit of 25% of the cash price is made and 36 monthly installments of $5,500.00 each are required. Calculate: (a) The hire purchase price of the TV (b) The percentage interest charged. (c) What are the key points to consider when making a hire purchase agreement? Leandra Clarke’s gross salary is $140,000 per month. Given that the income tax threshold is $125,008 and that her monthly deductions are as follows i. NIS 2.75% of gross salary; ii. 25% of her taxable income as income tax; iii. NHT contributions (2% of gross salary); iv. Education Tax payments (2.25% of her statutory income); v. a pension contribution of 5% of her gross salary vi. car loan payments of $42,000. (a) Complete the necessary calculations and determine Leandra’s net salary. (b) Discuss how Ms. Clarke could supplement her income were she to receive a very small net salary.arrow_forwardMarquette has an opportunity to sell its product through an online retailer. To begin selling through this online platform, they are required to ship 2,000 units to the retailers’ order fulfillment warehouse. The other condition of this offer is that they pay a one-time vendor marketing fee of $5,000. To get the units to the fulfillment warehouse by the deadline Marquette will need to pay for expedited shipping at a cost of $10 per unit. What is the minimum price Marquette should charge the retailer for this initial order of 2,000 units? (Show all supporting calculations). (NOTE: ignore taxes or other costs not specifically mentioned in the questions.)arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning