Godo Windsor Company manufactures equipment. Windsor's products range from simple automated machinery to complex systemscontaining numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation.The installation process does not involve changes to the features of the equipment and does not require proprietary informationabout the equipment in order for the installed equipment to perform to specifications. Windsor has the following arrangement withWinkerbean Inc.Winkerbean purchases equipment from Windsor for a price of $1,020,000 and contracts with Windsor to install theequipment. Windsor charges the same price for the equipment irrespective of whether it does the installation or not. Thecost of the equipment is $565,000.Winkerbean is obligated to pay Windsor the $1,020,000 upon the delivery and installation of the equipment.Windsor delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. Theequipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligationswhich should be accounted for separately.Assuming Windsor does not have market data with which to determine the standalone selling price of the installation services. As aresult, an expected cost plus margin approach is used. The cost of installation is $35,800; Windsor prices these services with a 25%margin relative to cost. (a)How should the transaction price of $1,020,000 be allocated among the service obligations? (Do not round intermediatecalculations. Round final answers to O decimal places.)Equipment $Installation $eTextbook and MediaList of AccountsSave for LaterAttempts: 0 of 5 used Submit Answer

Name: Godo Windsor Company manufactures equipment. Windsor's products range
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Description: Godo Windsor Company manufactures equipment. Windsor's products range from simple automated machinery to complex systemscontaining numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation.The

As per revenue recognition principle, all revenues should be recognised when these are earned.…

Business

Accounting

(a) How should the transaction price of $1,020,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to O decimal places.) Equipment $ Installation $ eTextbook and Media List of Accounts Save for Later Attempts: 0 of 5 used Submit Answer

(a) How should the transaction price of $1,020,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to O decimal places.) Equipment $ Installation $ eTextbook and Media List of Accounts Save for Later Attempts: 0 of 5 used Submit Answer

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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