Page 441 - F2 Integrated Workbook STUDENT 2019

Answers

Example 7.4

The total transaction price is $1million. The contract includes 2 performance
obligations, the sale of the swimming pool and the after sales maintenance.

The total transaction price should be allocated to each performance obligation in
proportion to standalone selling prices.

Standalone selling prices are:

$
Swimming pool 900,000

2 years after sales maintenance 200,000

––––––––
1,100,000

However, total consideration receivable is only $1,000,000. This means that the
customer is receiving a discount. The discount should be allocated across all
performance obligations. Overall a discount of 9.1% (100,000/1,100,000) has
been applied to this arrangement.

The transaction price allocated to the swimming pool should be $818,182
(($900,000/$1,100,000) × $1,000,000).

The transaction price allocated to the after sales maintenance should be
$181,818 (($200,000/$1,100,000) × $1,000,000).

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