Question

Hopner Products enters into a contract with Tulles to sell three different products. Each of the products is a separate performance obligation. Based on the information presented in the table, what is the standalone price of product Z using the residual approach? $415,000 Standalone Price $150,000 $125,000 Not Available Transaction Price Product OA, $255,000 OB. $290,000 O C. $115,000 D. $140,000

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Answer #1

Solution: 140,000

Working: Using the residual approach the estimation of standalone selling price is done by subtracting the observable standalone selling prices of the products or services associated with the other performance obligations from the amount of transaction price. Thus:

= 415,000 - 150,000 - 125,000

= 140,000

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