Question

Winchell wrote a contract that involves two performance obligations. Product A has a stand-alone selling price of $50, and product B has a stand-alone selling price of $100. The price for the combined product is $120. How much of the transaction price would be allocated to the performance obligation for delivering product A

Answer 1

the transaction price allocated to product B is $40

Step-by-step explanation:

The computation of the transaction price allocated to product B is shown below:

= Price of the combined product × price of product A ÷ (price of product A + price of product B)

= $120 × $50 ÷ ($50 + $100)

= $120 × $50 ÷ $150

= $40

Hence, the transaction price allocated to product B is $40

We simply applied the above formula so that the correct value could come

And, the same is to be considered