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3 February, 01:55

Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $180,000 on March 15, 2018. Estimated standalone fair values of the equipment, installation, and training are $90,000, $60,000, and $30,000 respectively.

The transaction price allocated to equipment, installation and training is:

a. $144,000 for the entire bundle.

b. $72,000, $48,000 and $24,000 respectively.

C. $48,000, $48,000, $48,000 respectively.

d. $90,000, $60,000, $30,000 respectively.

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  1. 3 February, 01:59
    0
    d. $90,000, $60,000, $30,000 respectively.

    Explanation:

    The computation of price allocated is shown below:-

    Ratio of values $90,000 : $60,000 : $30,000

    = 3 : 2 : 1

    Total cost = $180,000

    Equipment = $180,000 * 3 : 6

    = $90,000

    Installation = $180,000 * 2 : 6

    = $60,000

    Training = $180,000 * 1 : 6

    = $30,000

    Therefore the Equipment, Installation, Training is $90,000, $60,000, $30,000 respectively.
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