Question

In: Accounting

Perfect Party Company contracts with a customer to provide its birthday party? package, including a? cake,...

Perfect Party Company contracts with a customer to provide its birthday party? package, including a? cake, balloons, and musical entertainment. In? addition, Perfect Party will host the event. Perfect Party offers the musical entertainment only when it also hosts the party. It often sells cakes and balloons separately that it delivers before a party. Identify the separate performance obligations in this contract. ? (Yes /? No) 1. Providing the cake 2. Providing the balloons 3. Hosting 4. Providing musical entertainment 5. Providing hosting and musical entertainment 6. Providing the cake and hosting 7. Providing the cake and balloons 8. Providing the cake and musical entertainment 9. Providing the balloons and hosting 10. Providing the balloons and musical entertainment

Solutions

Expert Solution

Separate performance obligations in the Contract: A Performance Obligation is a promise which is made to the customer in order to transfer

(i) The good or service or a bundle of goods or services that is distinct or it could be

(ii) A series of distinct goods or services that are substantially the same having the same pattern of transfer to the customer.

If the good or service is distinct, yes it is a separate performance obligation or else it's not.

1. Providing the cake: NO, as it is provided in the package

2. Providing the balloons: No, as it is provided the package

3. Hosting: Yes, as it is separately mentioned

4. Providing musical entertainment: Yes, as it is interlinked to hosting

5. Providing hosting and musical entertainment: Yes, as this is separately identified according to the contract

6. Providing the cake and hosting: NO, as these are distinct parts of this contract

7. Providing the cake and balloons: NO, these are not separately mentioned rather they are done according to the contract.

8. Providing the cake and musical entertainment: No, as these are distinct parts of this contract

9. Providing the balloons and hosting: No, these are distinct parts of the question.

10. Providing the balloons and musical entertainment: No, as these are not combined and judged.

ekkarill92 answered 1 year ago
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