Superior Cars sold a car for $35,000 cash. In addition, the company will provide 4 oil...

 
 

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Superior Cars sold a car for $35,000 cash. In addition, the company will provide 4 oil changes per year for 5 years and an extended warranty for 5 years. The normal observable stand-alone selling prices are as follows: Car Oil change Service-type warranty Required: $35,000 $50 per oil change $4,000 1. Determine how much of the revenue should be allocated to the various performance obligations in this transaction. (4 marks) 2. Based on the revenue recognition criteria when revenue should be recognized to the components in this transaction? Explain. (6 marks) Superior Cars sold a car for $35,000 cash. In addition, the company will provide 4 oil changes per year for 5 years and an extended warranty for 5 years. The normal observable stand-alone selling prices are as follows: Car Oil change Service-type warranty Required: $35,000 $50 per oil change $4,000 1. Determine how much of the revenue should be allocated to the various performance obligations in this transaction. (4 marks) 2. Based on the revenue recognition criteria when revenue should be recognized to the components in this transaction? Explain. (6 marks)

Answer rating: 100% (QA)

Revenue Allocation and Recognition for Superior Cars 1 Revenue Allocation Superior Cars has included three performance obligations in this transaction ... View the full answer