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On October 1, 20X1, Bullseye Company sold 250,000 gallons of diesel fuel to Schmidt Co. at $3 per gallon. On November 8, 20X1, 150,000 gallons were delivered; on December 27, 20X1, another 50,000 gallons were delivered; and on January 15, 20X2, the remaining 50,000 gallons were delivered. Payment terms are 10% due on October 1, 20X1; 50% due on first delivery; 20% due on the next delivery; and the remaining 20% due on final delivery.

Required:
a. Do each of the three deliveries represent a distinct performance obligation, or is there a single performance obligation requiring three deliveries?
b. What amount of revenue should bullseye recognize from this sale during 2018?

Respuesta :

abiolataiwo2015

a. There is a single performance obligation requiring three deliveries.

b. The amount of revenue should bullseye recognize from this sale during 2018 is $600,000.

Performance obligation

a. The single performance obligation requiring three deliveries is the delivering of  250,000 gallons of diesel fuel.

b. Revenue recognized

Delivering=3×250,000

Delivering=750,000

Revenue recognized=750,000×80%

Revenue recognized=$600,000

Inconclusion there is a single performance obligation requiring three deliveries and the amount of revenue should bullseye recognize from this sale during 2018 is $600,000.

Learn more about performance obligation here:https://brainly.com/question/15874481

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