ABC is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation and training are $90,000, $60,000 and $30,000 respectively. The journal entry to record the transaction on March 15, 2021 will include a

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anthougo anthougo · Answer 1 · 2020-08-14T02:59:00+02:00

Answer:

Debit Cash or Accounts Receivable (Container Corporation) $144,000

Credit Sales Revenue $72,000

Credit Installation Revenue $48,000

Credit Training Revenue $24,000

To record the sale of goods and services worth $144,000.

Explanation:

a) Data and Calculations:

Performance Obligations and Contract Price:

Computer equipment = $90,000/$180,000 x $144,000 = $72,000

Installation = $60,000 x 0.80 = $48,000

Training = $30,000 x 0.80 = $24,000

Total purchase costs = $144,000

b) The performance obligations and the consideration prices are allocated accordingly based on their separate consideration values.