Warranty and Performance Obligation
Warranty and Extended Warranty
In first case a 6 Months limited warranty . Ths warranty guarantee that creative will cover any cost that arise due to repair or replacement associated with defective product , Not dicussed about recovery of labour cost . This obligation is not separated from the product sold . this performance obligation relates to service .
Other one A coupon to purchase E- creative – This is separate performance obligation . it performance depends on Customer exercise this option or not . As per Question, we noticed that it expected that 25% discount coupon will be utilized
Other part also mentioned that a coupon to purchase one year extended warranty and customer can opt for $ 95 instead of $ 70 . Chances to avail this etended benefit by 45%
Creative Computing sells a Table Computer called | |||
Sales price $ 875 | |||
A 6 months Limited Warranty | |||
A coupon to purchase a creative Pro Book - E book | |||
reader fo $ 420 | |||
Price represents 30% discounted price - Regular Price $ 600 | |||
Expect that 25% discount coupon will be utilized | |||
One year extended Warranty $ 70 | |||
Customer can extended warranty fror $ 95 - of they do nto opt for $ 70 | |||
45% customer will purchase extended Waranty | |||
Protable alone can be sale $ 855 | |||
We need to prepare Journal Entries relates to 90000 Protab Package ' | |||
Performance Obligation | Standalone Selling price opf the performace Obligation | % of the sum of standalone selling price of the performance obligation | Allocation of Transaction price to performance Obligation |
Sale of Product - Without Limited Warranty | 7,69,50,000 | 88% | 6,93,24,324 |
A coupon to purchase a creative Pro Book - E book | 94,50,000 | 11% | 86,62,500 |
Coupon Purchase extended Warranty | 10,12,500 | 1% | 9,12,162 |
Total | 8,74,12,500 | 7,88,98,986 | |
Standalone Selling price | |||
Number of unit | 90,000 | a | |
Unit Selling Price ($/ Unit | 855 | b | |
Standalone Selling price $=A | 7,69,50,000 | (a*b) | |
Standalone Selling price | |||
Number of unit | 90,000 | a1 | |
As per Question | |||
reader fo $ 420 | |||
Price represents 30% discounted price - Regular Price $ 600 | |||
Expect that 25% discount coupon will be utilized | |||
Unit Selling Price ($/ Unit | 420 | b1 | |
Chance to avail this benefit | 25% | c1 | |
Standalone Selling price $=B | 94,50,000 | (a1*b1*c1) | |
Standalone Selling price | |||
One year extended Warranty $ 70 | |||
Customer can extended warranty fror $ 95 - of they do nto opt for $ 70 | |||
45% customer will purchase extended Waranty | |||
Number of unit | 90,000 | a1 | |
Chance to avail this benefit | 45% | b1 | |
Price difference $95-$70 | 25 | c1 | |
Standalone Selling price $ =C | 1012500 | (a1*b1*c1) | |
Total Sale value 90000 units | |||
As calculated above ( A+B+C)$ | 8,74,12,500 | ||
% wise completion | |||
Sale of Product - Without Limited Warranty | 88% | ($76950000/$87412500) | |
Sale of Product - Without Limited Warranty | |||
Sales price $ | 875 | C1 | |
% completion | 88% | C2 | |
Selling Unit | 90,000 | C3 | |
Allocation of Transaction price to performance Obligation | 6,93,24,324 | (C1*C2*C3) | |
A coupon to purchase a creative Pro Book - E book | |||
% wise completion | 11% | ($9450000/$87412500)=C1 | |
Sales price $ | 875 | C2 | |
Selling Unit | 90,000 | C3 | |
Allocation of Transaction price to performance Obligation | 86,62,500 | ||
Coupon Purchase extended Warranty | |||
% wise completion | 1% | ($1012500/$87412500)=C1 | |
Sales price $ | 875 | C2 | |
Selling Unit | 90,000 | ||
Allocation of Transaction price to performance Obligation | 9,12,162 |
Journal Entry | ||
Details | Debit($) | Credit($) |
Cash | 7,88,98,986 | |
Sales revenue | 6,93,24,324 | |
Deferred revenue - Discount option($8662500+$912612) | 95,74,662 | |
( Sale of prototab with performance Obligation |
Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab...
Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab Package includes the following: • One Protab computer, • A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months . A coupon to purchase a Creative Probook e-book reader for $420, a price that represents a 30% discount from the regular Probook price of $600....
annect 1 Creative Computing sells a tablet computer called the Protab. The $920 sales price of a Protab Package includes the following: • One Protab computer. • A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. . A coupon to purchase a Creative Probook e-book reader for $330, a price that represents a 40% discount from the regular Probook price...
Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab Package includes the following: • One Protab computer • A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. • A coupon to purchase a Creative Probook e-book reader for $180, a price that represents a 50% discount from the regular Probook price of $360....
Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab Package includes the following: • One Protab computer. • A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. • A coupon to purchase a Creative Probook e-book reader for $225, a price that represents a 50% discount from the regular Probook price of $450....
Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab Package includes the following: • One Protab computer. • A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. • A coupon to purchase a Creative Probook e-book reader for $225, a price that represents a 50% discount from the regular Probook price of $450....
Creative Computing sells a tablet computer called the Protab. The $860 sales price of a Protab Package includes the following: • One Protab computer. • A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. • A coupon to purchase a Creative Probook e-book reader for $675, a price that represents a 25% discount from the regular Probook price of $900....
Creative Computing sells a tablet computer called the Protab. The $620 sales price of a Protab Package includes the following: One Protab computer. A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. A coupon to purchase a Creative Probooke-book reader for $125, a price that represents a 50% discount from the regular Probook price of $250. It is expected that...
Creative Computing sells a tablet computer called the Protab. The $740 sales price of a Protab Package includes the following: One Protab computer. . A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. A coupon to purchase a Creative Probook e-book reader for $400, a price that represents a 50% discount from the regular Probook price of $800. It is...
Creative Computing sells a tablet computer called the Protab. The $970 sales price of a Protab Package includes the following: . One Protab computer. A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. A coupon to purchase a Creative Probook e-book reader for $200, a price that represents a 50% discount from the regular Probook price of $400. It is...
Creative Computing sells a tablet computer called the Protab. The $620 sales price of a Protab Package includes the following: • One Protab computer. • A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. • A coupon to purchase a Creative Probook e-book reader for $125, a price that represents a 50% discount from the regular Probook price of $250....