Sirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded every second month to the radio, and continuous music service for one year from the date the hardware is delivered. Required: Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column with "Not affected".

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded every second month to the radio, and continuous music service for one year from the date the hardware is delivered.

Required:
Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column with "Not affected".

 
 
 
 
* 00
D
SI
Dashboard
YouTube N Netflix
Clemson Campus..
WSJ The Wall Street Jo... A Math 2070 WebAs.
y! Yahoo Finance - S.
Clemson JobLini
Saved
Sirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By
purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded
every second month to the radio, and continuous music service for one year from the date the hardware is dèlivered.
Required:
Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or
Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column
with "Not affected".
Performance
Revenue
Obligation?
Recognized
eBook
Sign contract
Deliver radio
Provide download of software update
References
Provide monthly music service
< Prev
3 of 12
Next >
Graw
MacBook Pro
esc
000
000
#
2$
i
2
4.
5.
3.
A
G
H
Transcribed Image Text:* 00 D SI Dashboard YouTube N Netflix Clemson Campus.. WSJ The Wall Street Jo... A Math 2070 WebAs. y! Yahoo Finance - S. Clemson JobLini Saved Sirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded every second month to the radio, and continuous music service for one year from the date the hardware is dèlivered. Required: Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column with "Not affected". Performance Revenue Obligation? Recognized eBook Sign contract Deliver radio Provide download of software update References Provide monthly music service < Prev 3 of 12 Next > Graw MacBook Pro esc 000 000 # 2$ i 2 4. 5. 3. A G H
Expert Solution
Step 1

Performance Obligations and recognition of revenue:

a. Sale of Radio (Hardware): Recognize Revenue at a point of time("when") i.e., when the Sale is Made and Cash received.

b. Software Update: Recognize Revenue over time("as") i.e., each time software is updated in two months.

c. Continuous Music Service: Recognize Revenue over time("as") i.e., over the year.

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