Question
In: Accounting
Video Planet (“VP”) sells a big screen TV package consisting of a 60-inch plasma TV, a...
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 $2,295, sells the remote separately for $135, and offers the installation service separately for $270. The entire package sells for $2,600. Required: How much revenue would be allocated to the TV, the remote, and the installation service?
Solutions
Expert Solution
Based on the information available in the question, we can calculate the revenue to be abllocated to the TV, the remote and the installation service as follows:-
| Particulars | Fair Market Value | % of Fair Market Value | Package Price | Revenue Allocation |
| TV | 2,295 | 85.00% | 2,600 | 2,210 |
| Remote | 135 | 5.00% | 2,600 | 130 |
| Installation service | 270 | 10.00% | 2,600 | 260 |
| Total | 2,700 | 2,600 |
The percentage of fair market value for each item is obtained by :-
(Fair market value of the product/Total Fair market value) . Example :- For TV , it is $2,295/$2,700 = 85%
Please let me know if you have any questions via comments and all the best :)
ekkarill92 answered 1 year agoRelated Solutions
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Answer the questions below. For each part, show your
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