On January 1, 20x1, Pongcuter Co. enters into a contract with a customer to grant a software license for ₱1,000,000. The fee is payable at contract inception. The license has a term of four years, to reckon from the date the customer can use the software. The customer can determine how and when to use the right without further performance by Pongcuter Co. and does not expect that Pongcuter Co. will undertake any activities that significantly affect the intellectual property to which the customer has rights. The software is transferred to the customer on February 1, 20x1. However, the code, which is necessary for the customer to use the software, is transferred only on April 1, 20x1. How should Pongcuter Co. recognize revenue from the fixed consideration in the contract? a. in full on February 1, 20x1 b. in full on April 1, 20x1 c. deferred and amortized over four years starting on February 1, 20x1 d. deferred and amortized over four years starting on April 1, 20x1
On January 1, 20x1, Pongcuter Co. enters into a contract with a customer to grant a software license
for ₱1,000,000. The fee is payable at contract inception. The license has a term of four years, to
reckon from the date the customer can use the software. The customer can determine how and
when to use the right without further performance by Pongcuter Co. and does not expect that
Pongcuter Co. will undertake any activities that significantly affect the intellectual property to
which the customer has rights. The software is transferred to the customer on February 1, 20x1.
However, the code, which is necessary for the customer to use the software, is transferred only on
April 1, 20x1. How should Pongcuter Co. recognize revenue from the fixed consideration in the
contract?
a. in full on February 1, 20x1
b. in full on April 1, 20x1
c. deferred and amortized over four years starting on February 1, 20x1
d. deferred and amortized over four years starting on April 1, 20x1
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