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Atletico Cicero Incorporated: Selling an Assembly Line System to EMI

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Atletico Cicero Incorporated: Selling an Assembly Line System to EMI
Mixer Segment Molding Segment Packaging Segment Installation
Total
$ 37,600 $ 27,600 $ 17,600
$ 7,600
$ 90,400
Atletico Cicero 1
Atletico Cicero Incorporated (ACI) is a public company with December 31 fiscal year-end. In the fiscal quarter, ending September 30, 2010, it entered into a sales agreement with Elgin Maker International (EMI). Under the sales agreement, ACI is selling an assembly line system to EMI that consists of three components: Mixer Segment, Molding Segment and Packaging Segment. 130107
ACI will install the assembly line system at EMI’s Pilsen manufacturing facility, where it will be used by EMI to manufacture Elgin bars. The sales agreement between ACI and EMI provides for the following pricing:
The sales agreement is dated September 14, 2010. ACI agrees to deliver the mixer segment and molding segment to EMI by September 25, 2010, as ACI has those two components of the assembly line system on hand at the time the sales agreement is entered into. The sales agreement does not provide EMI with a general right of return for any components of the assembly line.
ACI delivers the two components of the assembly line system on September 20, 2010, and agrees to deliver the packaging segment to EMI by December 20, 2010. The delivery date for the packaging segment is delayed because ACI does not have that component on hand at the time the sales agreement is entered into. As such, ACI has to manufacture that component. Because of the backlog of orders ACI has in its manufacturing department at the time it enters into the sales agreement with EMI, it cannot commit to delivering the packaging segment to EMI until December 20, 2010. ACI actually delivers the packaging segment on December 15, 2010, and agrees to install the complete assembly line system at EMI’s Pilsen facility on January 5, 2011. ACI cannot install it sooner because its installation technicians are either otherwise committed to other customer installation orders or on vacation for

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