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Question 16 Novak Company manufactures equipment. Novak's products range from simple automated machinery to complex systems containing numerous components Unitselling price range from $200,000 to $1,500,000 and are quoted indusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Novak has the following arrangement with Winkerbean Inc. Winkerbean purchases equipment from Novak for a price of $980.000 and contracts with Novak to install the equipment. Novak charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Novak determines installation service is estimated to have a standalone selling price of $53,000. The cost of the equipment is $580.000 Winkerbean is obligated to pay Novak the $980,000 upon the delivery and installation of the equipment. Novak delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. The equipment has a us e of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately. How should the transaction price of $980,000 be allocated among the service obligations? (Do not round Intermediate calculations. Round final answers to decimal places.) Equipment Installation Prepare the journal entries for Novak for this revenue arrangement on June 1, 2020 and September 30, 2020, assuming Novak receives payment when installation is completed. (Credit account titles are automatically indented when the amount is entered. Do not inden manually. If he entry is required, select "No entry for the account titles and enter for the amounts) Debit Credit Date Account Titles and Explanation (To record cost of goods sold) (To record service revenue)

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