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30 December, 08:13

Fuhremann Co. is a full-service manufacturer of surveillance equipment. Customers can purchase any combination of equipment, installation services, and training as part of Fuhremann'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 $80,000. Estimated standalone selling prices of the equipment, installation, and training are $90,000, $7,000, and $3,000, respectively. How should the transaction price be allocated to the equipment, installation, and training

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  1. 30 December, 11:14
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    Equipment transaction price is $72,000

    Installation transaction price $5,600

    Training transaction price is $2,400

    Explanation:

    The transaction price of $80,000 should be allocated to the equipment, installation and training based on the individual stand-alone prices of each as calculated below:

    Transaction price of an item=transaction price*item stand-alone price/total of stand-alone prices

    transaction price is $80,000

    total stand-alone prices=$90,000+$7000+$3000

    =$100,000

    Equipment transaction price=$80,000*$90,000/$100,000

    =$72,000

    Installation transaction price=$80,000*$7000/$100.000

    =$5,600

    Training transaction price=$80,000*$3000/$100,000

    =$2,400
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