Business, 18.10.2019 17:20 Seena912

Crankshaft company manufactures equipment. crankshaft's products range from simple automated machinery to complex systems containing numerous components. unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. the installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. crankshaft has the following arrangement with winkerbean inc.
(a)-winkerbean purchases equipment from crankshaft for a price of $1,000,000 and contracts with crankshaft to install the equipment. crankshaft charges the same price for the equipment irrespective of whether it does the installation or not. using market data, crankshaft determines that similar installation services provided by other entities are sold for $50,000. the cost of the equipment is $600,000.
(b)-winkerbean pays crankshaft the $1,000,000 upon the delivery of the equipment.

crankshaft delivers the equipment on june 1, 2017, receives payment from winkerbean, and completes the installation of the equipment on september 30, 2017. the equipment has a useful life of 10 years. assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately.

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Crankshaft company manufactures equipment. crankshaft's products range from simple automated machine...

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