Engelhart Company licenses customer relationship software to Kristin Incorporated for 3 years. In addition to providing the software, Engelhart promises to provide consulting services over the life of the license to maintain operability within Kristin?s computer system. The total transaction is $210,000. Based on the standalone values, Engelhart estimates the consulting services have a value of $75,000 and the software license has a value of $135,000. Upon install on July 1, 2019, Kristin pays Engelhart $100,000; the balance of the contract is due December 31, 2019. Explain how you would account and determine the revenue for 2019, assuming (a) the performance obligations are interdependent and (b) the performance obligations are not interdependent.
Engelhart Company licenses customer relationship software to Kristin Incorporated for 3 years. In addition to providing the software, Engelhart promises to provide consulting services over the life of the license to maintain operability within Kristin?s computer system. The total transaction is $210,000. Based on the standalone values, Engelhart estimates the consulting services have a value of $75,000 and the software license has a value of $135,000. Upon install on July 1, 2019, Kristin pays Engelhart $100,000; the balance of the contract is due December 31, 2019. Explain how you would account and determine the revenue for 2019, assuming (a) the performance obligations are interdependent and (b) the performance obligations are not interdependent.
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