Question

On February 1, 2018, company A sold a package of goods to a customer that included Products A, B, and C. The total sales price was $100,000 which was paid by the customer and product A was delievered to the customer on that date. Product B was delievered to the cistomer on March 1, 2018 and product C was delivered on August 1, 2018. Company A regularly sells Product A and b on a stand-alone basis for $60,000 and $40,000, respectively. However, Company A only sells Product C when packaged with other items. Company A considers each product a performance obligation and considers the performance obligation satisfied upon delivery of the product to the customer. Required: How much revenue could Company A recognize on: Feburary 1, 2018, March 1, 2018 August 1, 2018?

Answer 1

Answer:

Given data

A, B, and C. The total sales price was $100,000

Company A regularly sells Product A and b on a stand-alone basis for $60,000 and $40,000, respectively

Solution:

A product transferred to clients is a separate performance duty if the organization separately sells a product or the customer can advantage from that product collectively with different sources. Since the Company Sells Product A & B on a stand-alone basis, there are only two overall performance responsibilities within the settlement.

Product C isn't a separate performance duty. The bundles rate is allocated between the overall performance duties within the ratio of their relative stand-alone price.

Product A: $60,000 - recognised upon delivery i.e February 1, 2018,

Product B: $40,000 - recognised upon delivery i.e March 1, 2018.

August 1, 2018 - No revenue is recognised.