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Hi Sir
Can you olease help me understand how to solve the MCQ ques number 138. It is regarding derringto co selling free laptop. I am not getting the book solution.
How did they arrive at the solution. I mean they calculated the amount of laptop by dividing wih the percentage. But why?? And why did they divide the broadband service amt by 2??
Hi,
The revenue for the laptop and service needs to be based upon the stand-alone prices. So the stand alone price for the laptop is 22% of the total stand-alone price (200/920). This is then applied to the actual price charged of 720, giving the 158. If you are curious where the 720 comes from then this is just the price of the broadband because don’t forget that the laptop is free in the transaction.
The service is divided by two because it is a two year service and the question is asking how much should be recognised in the first year.
Thanks
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