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How should NEFRARIOUS account for the fixed consideration and the contract costs, respectively?

How should NEFRARIOUS account for the fixed consideration and the contract costs, respectively?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On Nov. 1, 20x1, NEFARIOUS Co. enters into a contract to transfer a license to EVIL Co. The license provides EVIL the right to use NEFARIOUS' intellectual property over a four year period. In exchange, EVIL pays a fixed consideration, which is due at contract inception. The intellectual property does not change over the license period. NEFARIOUS effectively transfers the license to EVIL on Jan. 31, 20x2. NEFARIOUS incurred direct contract costs in 20x1. How should NEFRARIOUS account for the fixed consideration and the contract costs, respectively?

 

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Fixed consideration Contract costs expensed in full on 11/1/x1 expensed in full on 1/31/x2 expensed in full in 20x1 deferred and amortized a. revenue in full on 11/1/x1 b. revenue in full on 1/31/x2 C. revenue in full on 1/31/x2 d. deferred and amortized
Transcribed Image Text:Fixed consideration Contract costs expensed in full on 11/1/x1 expensed in full on 1/31/x2 expensed in full in 20x1 deferred and amortized a. revenue in full on 11/1/x1 b. revenue in full on 1/31/x2 C. revenue in full on 1/31/x2 d. deferred and amortized
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