Sullivan Software sells packages of a software program and one year's worth oftechnical support for $500. Its packaging lists the $500 sales price as comprisedof 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 $475and 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 thetechnical support) is (rounded):$450.$475.O $432.$400.

Standalone price of Software = $475Standalone price of tech support = $75Package price = $ 500

Answered: The amount of revenue that GAAP,…

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):

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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.

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