O'Hara Links Products sells a product that involves two separate performance obligations: the SwingRight golf club weight and the SwingCoach teaching software. SwingRight has a stand-alone selling price of $150, and the SwingCoach software, while not sold separately, is estimated to be sellable at $100. O'Hara sells both the SwingRight and the SwingCoach as a package deal of $200. How much of the transaction price would be allocated to the SwingCoach teaching software?

Question

Quizplus · Accepted Answer

The total standalone selling price of both products is $250 ($150 for the SwingRight and $100 for the SwingCoach). The allocation of the transaction price to the SwingCoach teaching software would be 40% of the package price ($100/$250 = 0.4). Therefore, $80 (0.4 x $200) would be allocated to the SwingCoach teaching software.

O'Hara Links Products Sells a Product That Involves Two Separate