Orange, 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?
Orange, 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Orange, Inc., sells a LearnIt-Plus software package that consists of their normal LearnIt math tutorial program
along 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 sells
for $100 per year. When should Orange recognize revenue for the parts of this arrangement? Would your answer
change if Orange did not sell the LearnIt Office Hours separately, but believed it would price it at $100 per year
if they ever decided to do so?
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