Answer:
$45,455 and $4,545
Explanation:
Given that
The machine stand alone price = $50,000
Value of the installation = $5,000
Agreed purchase value of the machine = $50,000
So, by considering the above information, the contract price allocated to machine is
Contract Price allocated to Machine = Total Contract price × Standalone price ÷ (Standalone price of machine + installation value)
= $50,000 × $50,000 ÷ $55,000
= $45,455
And for installation , it is
Contract Price allocated to Installation
= $50,000 × $5,000 ÷ $55,000
= $4,545
