Splish Co. is a full-service manufacturer of surveillance equipment. Customers can purchase any combination of equipment,...
Splish Co. is a full-service manufacturer of surveillance equipment. Customers can purchase any combination of equipment, installation services, and training as part of Splish’s security services. Thus, each of these performance obligations are separate with individual standalone selling prices. Laplante Inc. purchased cameras, installation, and training at a total price of $82,400. Estimated standalone selling prices of the equipment, installation, and training are $82,800, $6,440, and $2,760, respectively. How should the transaction price be allocated to the equipment, installation, and training?
Homework Answers
| Stand alone price | Percentage of Stand alone price | Allocated cost | |
| Equipment | 82,800 | 82,800/92,000 = 90% | 82,400 x 90% = $74,160 |
| Installation | 6,440 | 6,440/92,000 = 7% | 82,400 x 7% = $5,768 |
| Training | 2,760 | 2,760/92,000 = 3% | 82,400 x 3% = $2,472 |
| Total | $92,000 | 100% | $82,400 |
| Allocated cost | |
| Equipment | $74,160 |
| Installation | $5,768 |
| Training | $2,472 |
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