Lemon Company signed a contract charging a customer P600,000 to change the windows of a customer's house. The contract includes costs for materials and labor. The company would charge P250,000 for materials if sold separately and P500,000 for labor if the customer will purchase the needed materials. How much of the transaction price woud the company allocate to its performacne obligation to provide the needed services to the customer?

Lemon Company signed a contract charging a customer P600,000 to change the windows of a customer's house. The contract includes costs for materials and labor. The company would charge P250,000 for materials if sold separately and P500,000 for labor if the customer will purchase the needed materials. How much of the transaction price woud the company allocate to its performacne obligation to provide the needed services to the customer?

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

Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...

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Lemon Company signed a contract charging a customer P600,000 to change the windows of a customer's house. The contract includes costs for materials and labor. The company would charge P250,000 for materials if sold separately and P500,000 for labor if the customer will purchase the needed materials. How much of the transaction price woukd the company allocate to its performacne obligation to provide the needed services to the customer?
present in good accounting form AAA Company signed a contract charging a customer P600,000 to change the windows of a customer's house. The contract includes costs for materials and labor. The Company would charge P250,000 for materials if sold separately and P500,000 for labor if the customer will purchase the needed materials. How much of the transaction price would the company allocate to its performance obligation to provide the needed services to the customer?
Luke consulting enters into a contract with Holand University to restructure Holand's process for purchasing goods from suppliers. The contract states that Luke will earn a fixed fee of P25,000and earn an additional P10,000 if Holand achieves P10,000 of cost savings. Luke determines the transaction price as the expected value of expected consideration, what transsaction price will Luke estimate for this contract?
Mott Company purchases a machine from Janelle Company. Installation of the machine requires specialized knowledge that Mott Company does not possess. Janelle Company regularly includes installation as part of its sales contracts. The machine has a stand-alone price of $50,000, and the value of the installation is estimated to be $5,000. Mott agrees to purchase the machine for $50,000. How much of the contract price should be allocated to the machine and installation respectively?
Beautiful Company sold a set of washing machine and a dryer for a total contract price of P100,000 on December 15, 2021. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. The washing machine was delivered on December 20, 2021 but the dryer was delivered only on January 5, 2022. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021? *How much is the revenue to be recognized in 2022?
Beautiful Company sold a set of washing machine and a dryer for a total contract price of P100,000 on December 15, 2021. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. The washing machine was delivered on December 20, 2021 but the dryer was delivered only on January 5, 2022.1. How many performance obligations are there in the contract? 2. Use the same information in Number 5, how much is the revenue to be recognized in 2021? 3. Use the same information in Number 5, how much is the revenue to be recognized in 2022?
An full-service technology company provides equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. A Customer purchased computer equipment, installation and training for a total cost of P150,000 on May 22, 2021. Estimated stand alone selling price of the equipment, training and installation are P100,000, P90,000 and P60,000 respectively. How much is the transaction price allocated to the installation?
Careful Company sells goods that cost P600,000 to a customer for P800,000 on December 20, 2021. The sales price includes an installation fee, which is valued at P80,000. The fair value of the goods is P740,000. The installation is considered a separate performance obligation and is expected to take 3 months to complete. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021 and 2022?
Bella Pool Company sells prefabricated pools that cost P100,000 to customers for P180,000. The sales price includes an installation fee, which is valued at P25,000. The fair value of the pool is P160,000. The installation is considered a separate performance obligation and is expected to take 3months to complete. The transaction price is allocated to the pool and the installation is:a. P155,676 and P24,324 respectivelyb. P160,000 and P25,000 respectively Show complete solution
(Allocate Transaction Price) Geraths Windows manufactures and sells custom storm windows for threeseason porches. Geraths also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors. Geraths enters into the following contract on July 1, 2017, with a local homeowner. The customer purchases windows for a price of $2,400 and chooses Geraths to do the installation. Geraths charges the same price for the windows irrespective of whether it does the installation or not. Theinstallation service is estimated to have a standalone selling price of $600. The customer pays Geraths $2,000 (which equals the standalone selling price of the windows, which have a cost of $1,100) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Geraths completes installation onOctober 15, 2017, and the customer pays the balance due. Prepare…
On May 12. 2020, a customer bought a business package from the seller of gadgets. The price of the contract was P 1,000,000. It was specified that the total amount will be paid on an installment basis. the following items and services will be provided to the customer:• Merchandise • Invoice Printer• Shop neon Logo• Staff TrainingAll of these will be provided and exclusively supplied by the seller company. The contract listed the following price breakdown:• Merchandise 900,000• Invoice Printer 55,000• Shop Neon Logo signboard 15,000• Staff Training 30,000The first installment payment was made 5 months before the opening of the store. All the required training of the staff was completed before the start of the operation. The store started its operation on December 12, 2020, but the shop sign was not yet installed as of this date.Required: Compute the revenue from the contract as of December 31, 2020
Rahe Corp. sold a customer service contract with a price of $20,000 to Peterson Warehousing. Rahe Corp. offered terms of 2/10, n/30 and expects Peterson to pay within the discount period. Required: Prepare the journal entry to record the sale using the net method. Prepare the journal entry assuming the payment is made within 10 days (within the discount period).