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Allocate the transaction price

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Allocate the transaction price

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • January 29, 2022 at 5:24 pm #647712
    sooha
    Participant
    • Topics: 62
    • Replies: 71
    • ☆☆

    Shinji Co sells a machine and one year’s free technical support for
    $50,000. It usually sells the machine for $60,000 but does not sell
    technical support for this machine as a stand-alone product. Other
    support services offered by Shinji Co attract a mark-up of 50%. It is
    expected that the technical support will cost Shinji Co $10,000.

    Required:
    How should the transaction price be allocated between the machine
    and the technical support?

    could you help with this question

    February 2, 2022 at 7:30 pm #648004
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    Hi,

    What specifically do you need help upon? I’d like to see some form of attempt at the question and then I can help you with what you do not understand. Doing it this way improves your learning.

    To give you a start though, the key is that we have received $50,000 revenue and that needs to be split between the machine (goods) and the support services. To do this you need to allocate the $50,000 based on the stand alone prices using the $60,000 price of a machine and the cost plus aspect for the services.

    Have a go and see how you get on. I’ll then check to see if you get it right and if not then I’ll point out where you have made the mistake.

    Thanks

  • Author
    Posts
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