Question

Sandhill Company manufactures equipment. Sandhill’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Sandhill has the following arrangement with Winkerbean Inc.

Answer 1

This question is about a company named Sandhill and their arrangement with Winkerbean Inc.

Step-by-step explanation:

The subject of this question is Business and it is at the College level. The question is asking about a company named Sandhill and their arrangement with Winkerbean Inc. The information provided suggests that Sandhill manufactures equipment and has a pricing range for their products. The arrangement with Winkerbean Inc. is not specified in the question.

Answer 2

The question involves recognizing revenue from contracts in a business setting, specifically for a company that sells and installs equipment. The installation does not alter the equipment, indicating it may be accounted for as a separate performance obligation under FASB's ASC 606 guidelines.

Step-by-step explanation:

The question relates to the accounting and business practices involved in recognizing revenue from contracts with customers, specifically in the context of a company that manufactures and installs equipment. When dealing with revenue recognition, companies must follow specific guidelines that dictate when and how revenue is recorded in the financial statements. The installation process, as mentioned, does not involve changes to the features of the equipment or require proprietary information for the installed equipment to function to its specifications. This detail is significant as it may suggest that the installation is a distinct performance obligation separate from the equipment. Following the criteria outlined in FASB's ASC 606, if the installation is considered a separate performance obligation, Sandhill Company would recognize revenue for the equipment and the installation services at different times based on when control of the goods or services transfers to Winkerbean Inc.