Eugene Co.has inventory it purchased for $6,000.It sells the inventory to a customer for $10,000,including installation.Installation sold separately costs $1,000 and the inventory sold separately costs $10,000.What amount of Service Revenue is recognized by Eugene for installation once it has been completed?
A)$909.
B)$1,000.
C)$10,000.
D)$0,all the revenue is recorded as Sales Revenue since the installation was included in the contract.

Question

Quizplus · Accepted Answer

There are 2 performance obligations so the sales price is allocated to each performance obligation.$1,000/($1,000 + $10,000)= 0.0909;$10,000 × 0.0909 = $909.

Eugene CoHas Inventory It Purchased for $6,000