Adventurers Inc. sold a mountain bike to a customer for $1,000 including a two-year annual maintenance package.

Question:

Adventurers Inc. sold a mountain bike to a customer for $1,000 including a two-year annual maintenance package. The fair value of the mountain bike is $1,100 and the fair value of the maintenance package is $100. Calculate the allocation of revenue for each unit using
(a) The relative fair value method and
(b) The residual value method.
For the residual value method calculation, assume that only the fair value of the maintenance package is known.