Respuesta :
The transaction price allocatted is computed by the standalone price which is $200, the journal entry will be Software Supplier Inc. A/c Debit $300 to customer's account $300 Monthly Pay: Cash Account Debit $20 to customer account $20
The foundation for calculating revenue is the transaction price. The cost specified in the contract isn't always the case. It is the anticipation of what the company will get. It implies that a company must project the transaction price.
The next step in accordance with ASC 606 is to proportionally apportion the transaction price inside a contract based on the Standalone selling price values established for specific Performance commitments.
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Complete Question: Software Supplier Inc. sells to a customer a perpetual software license and post-contract customer support for a 12-month period, commencing at the time that the software is activated. Software Supplier Inc. charges $300 upfront when the software is purchased and $20 a month for 12 months, due at the end of the month. Software Supplier Inc. sells the software separately for $400 while the standalone selling price of the post-contract customer support is $200.
a. How should the transaction price be allocated among the performance obligation(s)? Round to the nearest dollar.
b. Prepare Software Supplier’s journal entry to record sale of software to the customer and the entry for the first monthly payment
