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How should gvc allocate transaction price to four products

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Question - Green View Corporation (GVC) enters into a contract to sell four products (A, B, C and D) for a total transaction price of $500,000. Each product is properly classified as a separate performance obligation. GVC only sells products A and B on an individual basis, thus it must estimate the standalone selling prices for product C and D. Information on these four products follows:

Product

Standalone selling price

Forecasted cost

Market competitor price

A

$100,000

$80,000

$108,000

B

200,000

166,000

206,000

C

Not available

82,000

102,000

D

Not available

72,000

94,000

Total

$400,000

$510,000

How should GVC allocate the transaction price to the four products using the residual approach?

Reference no: EM132048977

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