An entity sells four construction products and services. The stand-alone or individual selling prices of the products are as follows: Electrical/wiring - ₦124,000, Plumbing - ₦170,000, Laying of Foundation up to roofing - ₦461,200, Fence and gate - ₦182,840.
The entity sells each of the four products for ₦885,040 to Value for Money Limited.
The delivery of the plumbing, electrical, foundation laying to roofing, fence and gate is to be treated as separate performance obligations. The entity is expected to complete the plumbing and electrical on different dates.
Required: Allocate the discount received by the customer.
Round up all answers to 2 decimal places.
See the suggested solution to practice activity 13.28 here.
Suggested solution to practice activity 13.28
There is no information about the performance obligation that resulted in the discount.
The discount is ₦53,000.
Electrical/wiring:
Stand-alone selling price ₦124,000.00
Allocated discount (₦124,000 * ₦53,000/938,040) (₦7,006.10)
Allocated transaction price ₦116,993.90
Plumbing:
Stand-alone selling price ₦170,000.00
Allocated discount (₦170,000 * ₦53,000/938,040) (₦9,605.13)
Allocated transaction price ₦160,394.87
Laying of Foundation up to roofing:
Stand-alone selling price ₦461,200
Allocated discount (₦461,200 * ₦53,000/938,040) ₦26,058.16
Allocated transaction price ₦435,141.84
Fence and gate:
Stand-alone selling price ₦182,840
Allocated discount (₦182,840 * ₦53,000/938,040) ₦10,330.61
Allocated transaction price ₦172,509.39
Total stand-alone selling price:
₦124,000 + ₦170,000 + ₦461,200 + ₦182,840 = ₦938,040
Total allocated transaction price:
Electrical/wiring ₦116,993.90
Plumbing ₦160,394.87
Laying of Foundation up to roofing ₦435,141.84
Fence and gate ₦172,509.39
₦885,040.00
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