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Part B - Performance Obligations 9 marks Griswold Company, a public company, manufactures equipment. Griswold's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $140,000 to $1,200,000 and are quoted inclusive of installation. The installation process does NOT involve changes to the features of the equipment to perform specifications. Griswold has the following relationship with Clark Inc. Clark can purchase equipment from Griswold for a price of $200,000 and contracts with Griswold to install the equipment. Using market data, Clark determines installation service is estimated to have a fair value of $20,000. The cost of the equipment is $78,000. Clark is obligated to pay Griswold the $200,000 upon installation of the equipment. Griswold delivers the equipment on August 1, 2020 and completes the installation of the equipment on October 1, 2020. The equipment has a useful life of 7 years. Assume the equipment and the installation are two distinct performance obligations. Required a) How should the transaction price of $200,000 be allocated among the performance obligations? . b) Prepare the journal entries for Griswold for this revenue arrangement for 2020, assuming Griswold receives payment when installation is completed. DATE ACCOUNT TITLES DR CR

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