TelCo provides a bundled service offering to a customer for $3000 upfront. The services provided are as follows:
Upfront advice
'on-call' advice
Database access for a 2-year period
If TelCo were to charge a separate fee for each service if sold separately the fee would be:

Using the relative fair value approach the amount of revenue recognised in relation to the on-call advice is:

Question

TelCo provides a bundled service offering to a customer for $3000 upfront. The services provided are as follows:
Upfront advice
'on-call' advice
Database access for a 2-year period
If TelCo were to charge a separate fee for each service if sold separately the fee would be:

Using the relative fair value approach the amount of revenue recognised in relation to the on-call advice is:

Quizplus · Accepted Answer

Using the relative fair value approach, the total amount of revenue is allocated based on the standalone selling price of each service. The standalone selling price of upfront advice is $800, the standalone selling price of on-call advice is $1000, and the standalone selling price of database access is $1800. Therefore, the revenue recognized in relation to on-call advice would be $1000.

TelCo Provides a Bundled Service Offering to a Customer for $3000