According to ASC605-25-25-5 “In an arrangement with multiple deliverables, the delivered item or items shall be considered a separate unit of accounting if both all of the following criteria are met:
a. The delivered item or items have value to the customer on a standalone basis.
b. If the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item or items is considered probable and substantially in the control of the vendor.”
Therefore, Hemo should identified 5 units of the equipment,50 boxes of the equipment supply, the three- years screen and the report services, and one year monitor and test services However, there are other potential deliverables in the agreement such as,…show more content… Installation is not considered as a deliverable item because it has not standalone value. One year monitor and test service and three year screen and report are considered to be deliverable because each of them have a standalone value, specified time and in the control of the vendor.
Part II Answer:
Equipment
Due to the fact that Hemo dose not sell the equipment separately and there is no competitor in the same region for the BIO-07, The best way for Hemo in order to determine the selling price is using the “Best Estimate of Selling Price”. Therefore, I believe that 625000 dollars, which Hemo determined after adding all the costs and the profit margin, is the best price for the equipment
Discount on Future Supplies
Due to the fact that Hemo dose not sell the Supplies for the Equipment separately, Hemo should use “Vendor-Specific Objective Evidence” in order to determine the selling price. Hemo determine the supplies for 3000$ per box. Therefore, the discount would be $1000 per box, which is already determined in the case.
