Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On July 15, 2016, Ortiz & Co. signed a contract to provide Ever Fresh Bakery with an ingredient-weighing system for a price of $100,800. The

On July 15, 2016, Ortiz & Co. signed a contract to provide Ever Fresh Bakery with an ingredient-weighing system for a price of $100,800. The system included finely tuned scales that fit into EverFresh’s automated assembly line, Ortiz’s proprietary software modified to allow the weighing sytem to function in Ever Fresh automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis. (Ortiz competes with other vendors who offer ongoing calibration contracts for Ortiz’s systems.) If Ortiz was to provide these goods and services separately, it would charge $69,000 for the scales, $10,000 for the software, and $21,000 for the calibration contract. Ortiz delivered and installed the equipment and software on August 1, 2016, and the calibration service commenced on that date.

Assume that the scales, software and calibration service are all separate performance obligations. How much revenue will Ortiz recognize in 2016 for this contract?

$79,632

$100,800

$87,750

$0

Step by Step Solution

3.40 Rating (144 Votes )

There are 3 Steps involved in it

Step: 1

Revenue Ortiz recognize in 201... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

8th edition

978-1259997525, 1259997529, 978-1259548185

More Books

Students also viewed these Accounting questions

Question

Explore common areas of clinical focus in health psychology.

Answered: 1 week ago