Buzz's Educational Software Outlet Sells Two or More of the Video

question 60

Multiple Choice

Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows:

Using the incremental method for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun) ? Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis. (Do not round any intermediary calculations.)

• A) $20.07
• B) $30.93
• C) $27.00
• D) $24.00

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Definitions:

Non-Controlling Interest (NCI)

The portion of equity in a subsidiary not owned by the parent company, representing minority shareholders' interest.

Full Fair Value

An approach within certain valuation and accounting frameworks where assets and liabilities are recorded at their full market value.

Proportionate Consolidation Method

An accounting method where an investing entity records its share of the assets, liabilities, income, and expenses of an associate or joint venture.

Assets and Liabilities

Assets are resources owned by a company expected to provide future benefits, and liabilities are obligations a company owes to outside parties.