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What would mickey recorded on the date of sale

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Reference no: EM132960761

Mickey sells high end commercial and home appliances as well as offering a number of services together with the appliances that it sells. Assume that Mickey sells refrigerators on a standalone basis. Mickey also sells installation services and maintenance services for refrigerators. However, Mickey does not offer installation or maintenance services to customers who buy refrigerators from other vendors.

Pricing for refrigerators is as follows.

Refrigerator only                                                           $2,140
Refrigerator with Installation service                                 2,260
Refrigerator with maintenance services                                  2,380
Refrigerator with installation and maintenance services               2,450

In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $240. Additionally, the incremental amount charged by Mickey for installation approximates the amount charged by independent third parties. Refrigerators are sold subject to a general right of return. If a customer purchases a refrigerator with installation and/or maintenance services, in the event Mickey does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $2,140.

Assume that a customer purchases a refrigerator with both installation and maintenance services for $2,450. Based on its experience, Mickey believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately.

Problem 1: Identify the separate performance obligations related to the Mickey revenue arrangement.

Problem 2: What would Mickey recorded on the date of sale?

Reference no: EM132960761

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