Identify whether the performance obligation and the revenue in 20x5, assuming The performance obligation are interdependent, and The performance obligations are not interdependent
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Armel Gamboa Jonas licenses customer relationship software to Malen Cezar Hedges Inc. for 3 years. In addition to providing the software, Armel Gamboa Jonas promises to perform consulting services over the life of the license to maintain operability within Malen Cezar Hedges’ computer system. The total transaction price is P200,000. Based on stand-alone values, Armel Gamboa Jonas estimates the consulting services have a value of P75,000 and the software license has a value of P125,000. Upon installation of the software on July 1, 20x5, Malen Cezar Hedges pay P100,000; the contract balance is due on December 31, 20x5.
Required: Identify whether the performance obligation and the revenue in 20x5, assuming
- The performance obligation are interdependent, and
- The performance obligations are not interdependent
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- Sullivan Software sells packages of a software program and one year's worth of technical support for $500. Its packaging lists the $500 sales price as comprised of a software program and technical support. All of Sullivan's sales are for cash, and there are no returns. Sullivan sells the software program separately for $475 and offers a year of technical support separately for $75. The amount of revenue that GAAP, regarding software revenue recognition, would require Sullivan to attribute to the software program (as opposed to the technical support) is (rounded): $450. $475. O $432. $400.Sarjit Systems sold software to a customer for $230,000. As part of the contract, Sarjit promises to provide "free" technical support over the next six months. Sarjit sells the same software without technical support for $200,000 and a stand-alone six-month technical support contract for $50,000, so these products would sell for $250,000 if sold separately. Prepare Sarjit's journal entry to record the sale of the software. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 Record the sale of software for cash. Note: Enter debits before credits Transaction 1 General Journal Debit Credit Recept natry Clear entry View general journalWestinghouse Company, a producer of washing machines, sells various customers. It has a contract to deliver 10 fully automatic washing machines to Soft and Wash Company for a total price of P400,000. The contract contains a clause for free repairs and maintenance services for a period of two years from date of purchase. Soft & Wash paid 50% of the price and half after 3 months. 1. How much sales revenue vill be recognized by Westinghouse on this sale? P400,000 b. P100,000 а. C. P200,000 d. No revenue
- Sarjit Systems sold software to a customer for $110,000. As part of the contract, Sarjit promises to provide “free” technical support over the next six months. Sarjit sells the same software without technical support for $96,000 and a stand-alone six-month technical support contract for $24,000, so these products would sell for $120,000 if sold separately. Prepare Sarjit’s journal entry to record the sale of the software.Tompson recently sold a machine for E100,000. Revenue related to the sale of the machine is recognised upon delivery to the customer's factory, and payment thereof is due promptly. Under the sales contract, Tompson has also committed to providing the customer with service and maintenance on the machine for 3 years at no additional charge. Tompson routinely sells the this type of machine for €90,000 on a stand alone basis, and it also offers a 3 year maintenance service on machines of this type for €30,000. It estimates that it will cost €10,000 to deliver the service and maintenace. The transaction price should be allocated as follows: a) £70,000 for the machine and £30,000 for the service b) £75,000 for the machine and £25,000 for the service c) €90,000 for the machine and £10,000 for the service d) €100,000 for the machine and £0 for the serviceOrange, Inc., sells a LearnIt-Plus software package that consists of their normal LearnIt math tutorial programalong with a one-year subscription to the online LearnIt Office Hours virtual classroom. LearnIt-Plus retails for$200. When sold separately, the LearnIt math tutorial sells for $150, and access to the LearnIt Office Hours sellsfor $100 per year. When should Orange recognize revenue for the parts of this arrangement? Would your answerchange if Orange did not sell the LearnIt Office Hours separately, but believed it would price it at $100 per yearif they ever decided to do so?
- Genius Ltd is a computers and software developer that enters into a contract with a customer to sell 12 computers for £600 each. In the contract the customer has required Genius Ltd to transfer the specific software license, perform the installation, and provide a software update and technical support for a two-year period for a price of £20,000. The company usually sells the software license, the installation service, the software update and the technical support separately to customers at the respective prices of £8,000, £4,000, £4,000 and £4,000. The customer requires a specific installation service that includes some specific functions to enable the software to interface with other customized software application. After the delivery of the first 6 computers, the contract is modified and the customer required the delivery of an additional 8 computers (for a total of 20 computers). The price of the additional computer is £490 which is the stand alone price of the additional products.…Enterprise Solutions Inc. licenses its productivity software to Blackmon Company for $100,000, payable at contract inception. Enterprise agrees to provide semiannual software upgrades over the 5-year length of the contract to enable Blackmon to benefit from any technological advancement. Enterprise concludes that the software license is not distinct from the promised upgrades. Required: What journal entries are necessary for Enterprise to account for this transaction?AGI software inc entered into a $250,000 contract with mcdonald company to transfer a software license, perform the related installation service and provide a tech support for three-year period. AGI sells the license to the software, installation service, and tech support as a bundle of product for a lump-sum price. the installation service and tech support could be performed by other entities and there is a ready market for those services. the stand-alone prices for software, installation service, and tech support service were 160,000 20,000 and 30,000 per year (i.e., total of 90,000 for three years) respectively. The contract was finalized on march 1 2020. AGI delivered the software license on april 1 2020 when its title was transferred to mcdonald. AGI completed installation on may 15 2020 at which point the tech support service will begin covering a period of three years. Upon installation of software on may 15, mcdonald paid for the software, installation service, and one-year…
- Sarjit Systems sold software to a customer for $80,000. As part of the contract, Sarjit promises to provide "free" technical support over the next six months. Sarjit sells the same software without technical support for $70,000 and a stand-alone six-month technical support contract for $30,000, so these products would sell for $100,000 if sold separately. Sarjit delivered the software and received cash of $80,000 on May 15. Allocate the transaction price to software and technical support, and determine the financial statements effects of the transaction on May 15. Complete this question by entering your answers in the tabs below. Financial Statements Effects Determine the financial statements effects of the transaction on May 15. Allocation Cash Assets $ 80,000 Balance Sheet Liabilities Stockholders' Equity Common Stock Retained Earnings Income Statement Expenses Net IncomeMaipao Corporation sells computer software to Mr. Bong. Mr. Bong shall pay P750,000 upfront fee in exchange for the following performance obligations: (1) equipment (2) initial training and (3) five years right over the computer software. The stand-alone selling price of the equipment is P380,000. The stand-alone selling price of the initial training is P280,000. The entity estimates the stand-alone selling price of the five year right over the computer software using the residual approach. On February 1, 20x1, Maipao receive the P150,000 cash and the balance payable in three annual payments beginning January 30, 20x2. Mr. Bong signs a 10% interest bearing for the balance. On August 1, Maipao has already transferred the equipment and conducted the initial training and the software license will commence on the same date. The entity determines that the performance obligations in the contract are distinct. Assume Mr. Bong has the right access the intellectual property, the total revenue…Maipao Corporation sells computer software to Mr. Bong. Mr. Bong shall pay P750,000 upfront fee in exchange for the following performance obligations: (1) equipment (2) initial training and (3) five years right over the computer software. The stand-alone selling price of the equipment is P380,000. The stand-alone selling price of the initial training is P280,000. The entity estimates the stand-alone selling price of the 5 year right over the computer software using the residual approach. On February 1, 20x1, Maipao receive the P150,000 cash and the balance payable in 3 annual payments beginning January 30, 20x2. Mr bong signs a 10% interest bearing for the balance. On august 1, Maipao has already transferred the equipment and conducted the initial training and the software license will commence on the same date. The entity determines that the performance obligations in the contract are distinct. Requirements: 1) Assume Mr. Bong has the right to use the intellectual property. The…
