Under a single contract, Sapra Corporation sold two machines to Gao Company in 2019. One of the…
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Under a single contract, Sapra Corporation sold two machines to Gao Company in 2019. One of the machines typically sells for $300,000 and the other for $150,000. Because Gao purchased the machines together, Sapra agreed to a price of $425,000 for both machines. The machines are used independently of one another in Gao s production process and it has agreed to receive shipment of each whenever it is ready to be sent to Gao s factory. Required: 1. What is the transaction price for the contract? 2. Does Sapra have one performance obligation or two? If there are two performance obligations, allocate the transaction price between the two performance obligations. 3. May Sapra recognize any revenue when it delivers one of the machines under the contract but has not yet delivered the other?
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