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 is aware of other companies that sell Product C for $20,000. 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

Allocation of contract price in the ratio of fair values of goods sold:

Good	Fair value	Ratio	Allocation	Date recognized
A	60,000	0.5	50,000.00	Feb-01
B	40,000	0.333333	33,333.33	Mar-01
C	20,000	0.166667	16,666.67	Aug-01
Total	120,000	1	100,000