Recognizing Revenue for Contracts that Contain Multiple Performance Obligations Nintendo manufactures the Switch, a gaming system that allows players to compete with each other online. The Switch includes the physical Switch as well as a one-year subscription to the Nintendo multiuser platform of Internet-based games. Nintendo sells individual one-year subscriptions to the Nintendo platform for $60. Nintendo sells individual Switch modules for $240. As a package deal, Nintendo sells the Switch System (module plus subscription) for $250. On January 1, 2019, Nintendo delivers 1,000 Switch Systems to Gamestop at a price of $250 per system. Nintendo receives $250,000 from Gamestop on January 25, 2019. Journal Entry each month Debit Credit Journal Entry at the point of sale Debit Credit Step 1: Identify the contract: Step 2: Identify the performance obligation(s): Step 3: Determine the transaction price: Step 4: Allocate the transaction price to each performance obligation (stand-alone selling prices): Step 5: Recognize revenue when (or as) each performance obligation is satisfied:
Recognizing Revenue for Contracts that Contain Multiple Performance Obligations Nintendo manufactures the Switch, a gaming system that allows players to compete with each other online. The Switch includes the physical Switch as well as a one-year subscription to the Nintendo multiuser platform of Internet-based games. Nintendo sells individual one-year subscriptions to the Nintendo platform for $60. Nintendo sells individual Switch modules for $240. As a package deal, Nintendo sells the Switch System (module plus subscription) for $250. On January 1, 2019, Nintendo delivers 1,000 Switch Systems to Gamestop at a price of $250 per system. Nintendo receives $250,000 from Gamestop on January 25, 2019. Journal Entry each month Debit Credit Journal Entry at the point of sale Debit Credit Step 1: Identify the contract: Step 2: Identify the performance obligation(s): Step 3: Determine the transaction price: Step 4: Allocate the transaction price to each performance obligation (stand-alone selling prices): Step 5: Recognize revenue when (or as) each performance obligation is satisfied:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Recognizing Revenue for Contracts that Contain Multiple Performance Obligations
Nintendo manufactures the Switch, a gaming system that allows players to compete with each other online.
- The Switch includes the physical Switch as well as a one-year subscription to the Nintendo multiuser platform of Internet-based games.
- Nintendo sells individual one-year subscriptions to the Nintendo platform for $60.
- Nintendo sells individual Switch modules for $240.
- As a package deal, Nintendo sells the Switch System (module plus subscription) for $250.
On January 1, 2019, Nintendo delivers 1,000 Switch Systems to Gamestop at a price of $250 per system. Nintendo receives $250,000 from Gamestop on January 25, 2019.
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Debit |
Credit |
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Journal Entry at the point of sale |
Debit |
Credit |
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Step 1: Identify the contract:
Step 2: Identify the performance obligation(s):
Step 3: Determine the transaction price:
Step 4: Allocate the transaction price to each performance obligation (stand-alone selling prices):
Step 5: Recognize revenue when (or as) each performance obligation is satisfied:
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