Question

Check my work Required: 1. Assume F&S offers a deal whereby enrolling in a new membership for $950 provides a year of unlimited access to facilities and also entities the member to receive a voucher redeemable for 20% off yoga classes for one year. The yoga classes are offered to gym members as well as to the general public. A new membership normally sells for $980, and a one year enrollment in yoga classes sells for an additional $500. F&S estimates that approximately 40% of the vouchers will be redeemed. F&S offers a 10% discount on all one year enrollments in classes as part of its normal promotion strategy. 1. a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price. c. Prepare the journal entry to recognize revenue for the sale of a new membership 2. Assume F&S offers a "Fit 40" coupon book with 40 prepaid visits over the next year. F&S has learned that Fit 40 purchasers make an average of 30 visits before the coupon book expires. A customer purchases a Fit 40 book by paying $500 in advance, and for any additional visits over 40 during the year after the book is purchased, the customer can pay a $10 visitation fee per visit. F&S typically charges $10 to nonmembers who use the facilities for a single day. nces a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price. c. Prepare the journal entry to recognize revenue for the sale of a new Fit 40 book. Complete this question by entering your answers in the tabs bel Reg 1A and 18 Reg 1C Reg 2A and 2B Reg 20 Indicate below whether each item is a separate performance obligation. For each separate performance oblic indicated, allocate a portion of the contract price. Item Description Performance Obligation? Stand Alone Prices Percentage of Total Stand Alone Prices Yoga discount voucher Facilities access Total stand alone price Item Description Percentage of Total Stand Alone Price Total Transaction Price Allocated Contract Price Yoga discount voucher Facilities access Total contract price Prey 1 of 8 Next >

Answer 1

Answer Page No 0 Given that, offer porice = $950 Voucher discount - 2018. New membership = 4980 Yoga classes – $500 Vouchers ore deemed = 4004. Noormal discount = 10%. price item desconiption : Performance stand alone Percentage to obligation? total price Yoga discount voucher $ 20 2%. facilities access $ 980 98% Total stand alone price $ 1000 Yoga discount voucher bland alone price = 5500 x 40% X 10 %. $20 (:5307 Yoga discount voucher % to total poice = 20 cm x 100 = 2% facilities access % to total price = 9800X100 = 10% 1000 1000 - 98%.

Page No @ Allocated Plem descoruption Penertage to totalprice Ta ansaction price a contract price Yoga discount, voucher $ 950 $19 Gym membership $ 950 Total price $950 Yoga discount voucher allocated contract price = 950 X 2 % 98% $931 = $.19 Gym membership allocated contract price = 950 X 98%. = $931 © Jowinal entry the precand recognize revenue for the way new membership :- Account title $950 Deborred revenue - membership fee $ 931 Debevied stevenue - Yoga coupon $19 Debit Credit - Cash Care There is only one performance obligation in Fit 40 member deal. The Fit 40 coupon book is a material oright to right of entry of the gym. Therefore this performance obligation

1 Page No ③ - olight of erbiy g Fes for 40 prepaid visits ? . The right of entry of gym for 40 prepaid visits is Seperate because it is both able of being distinct and Separately identifiable from other goods or services in eenliact. wthe price is the same as non-members, therefore the choice for supplementary visits over 40 is not o significant. Therefore, it is not a performance obligation in this deal. Since there is one performance obligtion in this deal. It is not required to assign the contract price to option of additional visits However, since the coupon look comprises 40 visils, we should assign total $ 400 contact price to cachvieit 2:10 840 = $400) @C Lowercle entry to record recognizes revenue for made of sto fit yo book Account title . Debit . Credit $ 500 Debered revencie a membership fee - $500 Cash