Question

Exercise 6-3 (Algo) Allocating transaction price (L06-4) Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $2,000, sells the remote separately for $125, and offers the installation service separately for $375. The entire package sells for $2.400 Required: How much revenue would be allocated to the TV, the remote, and the installation service? (Do not round intermediate calculations.) Item Description Allocated Revenue TV Remote Installation Total revenue

Answer 1

Answer:

Item Description	Allocated Revenues
TV [$2,400 X 80%]	$1,920
Remote [$2,400 X 5%]	$120
Installation [$2,400 X 15%]	$360
Total revenue	$2,400

Calculations:

Standalone price
TV	$2,000	80%
Remote	$125	5%
Installation	$375	15%
Total	$2,500	100%