Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
2nd Edition
ISBN: 9781337912259
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 17, Problem 8RE
Enterprise Solutions Inc. licenses its productivity software to Blackmon Company for $100,000, payable at contract inception. Enterprise agrees to provide semiannual software upgrades over the 5-year length of the contract to enable Blackmon to benefit from any technological advancement. Enterprise concludes that the software license is not distinct from the promised upgrades. What
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Enterprise Solutions Inc. licenses its productivity software to Blackmon Company for $100,000, payable at contract inception. Enterprise agrees to provide semiannual software upgrades over the 5-year length of the contract to enable Blackmon to benefit from any technological advancement. Enterprise concludes that the software license is not distinct from the promised upgrades.
Required:
What journal entries are necessary for Enterprise to account for this transaction?
AGI software inc entered into a $250,000 contract with mcdonald company to transfer a software license, perform the related installation service and provide a tech support for three-year period. AGI sells the license to the software, installation service, and tech support as a bundle of product for a lump-sum price. the installation service and tech support could be performed by other entities and there is a ready market for those services. the stand-alone prices for software, installation service, and tech support service were 160,000 20,000 and 30,000 per year (i.e., total of 90,000 for three years) respectively.
The contract was finalized on march 1 2020. AGI delivered the software license on april 1 2020 when its title was transferred to mcdonald. AGI completed installation on may 15 2020 at which point the tech support service will begin covering a period of three years.
Upon installation of software on may 15, mcdonald paid for the software, installation service, and one-year…
Assume that AntonTech starts selling TechStop franchises. TrueTech charges. Franchisees an initial fee in
exchange for (a) the exclusive right to operate the only TechStop in a particular area for a five-year period, (b)
the equipment necessary to distribute and repair AntonTech products, and (c) training services
to be provided over a two-year period. Similar equipment and training can be
purchased elsewhere.
1. How many performance obligations exist in this contract?
a. 0
b. 1
c. 2
d. 3
2.
AntonTech should recognize revenue for the right to operate a Techshop?
a. No transaction
b. No revenue
c. Point in time
d. Over time
3. AntonTech should recognize revenue for the equipment?
a. No transaction
b. No revenue
c. Point in Time
d. Over Time
Chapter 17 Solutions
Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
Ch. 17 - Prob. 1GICh. 17 - Prob. 2GICh. 17 - When a company recognizes revenue during a period,...Ch. 17 - Prob. 4GICh. 17 - Prob. 5GICh. 17 - What is the proper accounting for a wholly...Ch. 17 - If a seller enters into more than one contract...Ch. 17 - Prob. 8GICh. 17 - Prob. 9GICh. 17 - Prob. 10GI
Ch. 17 - Prob. 11GICh. 17 - Prob. 12GICh. 17 - Prob. 13GICh. 17 - Prob. 14GICh. 17 - Prob. 15GICh. 17 - Prob. 16GICh. 17 - If the standalone selling price of a good or...Ch. 17 - Prob. 18GICh. 17 - Prob. 19GICh. 17 - If the sellers performance creates on asset (e.g.,...Ch. 17 - Describe input and output methods used to measure...Ch. 17 - Prob. 22GICh. 17 - Prob. 23GICh. 17 - Prob. 24GICh. 17 - Prob. 25GICh. 17 - A company should recognize revenue when a. the...Ch. 17 - A contract between one or more parties creates: a....Ch. 17 - Morgan Company and its customer agree to modify...Ch. 17 - Chlorine Corp. has a contract to deliver pool...Ch. 17 - Prob. 5MCCh. 17 - Prob. 6MCCh. 17 - In accounting for a long-term construction...Ch. 17 - Prob. 8MCCh. 17 - Prob. 9MCCh. 17 - Prob. 10MCCh. 17 - CustomTee Inc. contracts with various customers to...Ch. 17 - Yankee Corp. agrees to provide Albany Company 24...Ch. 17 - Prob. 3RECh. 17 - Prob. 4RECh. 17 - Prob. 5RECh. 17 - Prob. 6RECh. 17 - VolleyElite runs a volleyball program consisting...Ch. 17 - Enterprise Solutions Inc. licenses its...Ch. 17 - Prob. 9RECh. 17 - Magical Memories sells Florida theme park vacation...Ch. 17 - Prob. 11RECh. 17 - Robotics Inc. contracts with a customer to build a...Ch. 17 - CoolShoes sells its elite tennis shoes to sports...Ch. 17 - Using the information in RE17-13, what journal...Ch. 17 - GameDay sells recreational vehicles along with...Ch. 17 - Prob. 16RECh. 17 - Using the information provided in RE17-16, prepare...Ch. 17 - Prob. 18RECh. 17 - Prob. 19RECh. 17 - Prob. 1ECh. 17 - Prob. 2ECh. 17 - Prob. 3ECh. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - Assume the same facts as in E17-5. On July 1,...Ch. 17 - Prob. 7ECh. 17 - Prob. 8ECh. 17 - Prob. 9ECh. 17 - Prob. 10ECh. 17 - Prob. 11ECh. 17 - Jonas Consulting enters into a contract to provide...Ch. 17 - Prob. 13ECh. 17 - Prob. 14ECh. 17 - Prob. 15ECh. 17 - Prob. 16ECh. 17 - Prob. 17ECh. 17 - Prob. 18ECh. 17 - Prob. 19ECh. 17 - Prob. 20ECh. 17 - Crazy Computer Store sells a back-to-school bundle...Ch. 17 - Each of the following is an independent situation...Ch. 17 - Prob. 23ECh. 17 - Prob. 24ECh. 17 - Prob. 25ECh. 17 - Prob. 26ECh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5PCh. 17 - Prob. 6PCh. 17 - Prob. 7PCh. 17 - SoccerHawk Merchandise Inc. enters into a 6-month...Ch. 17 - Prob. 9PCh. 17 - Prob. 10PCh. 17 - Prob. 11PCh. 17 - Prior to ASU 2014-09 changing the principles...Ch. 17 - The first step in the revenue recognition process...Ch. 17 - Prob. 3CCh. 17 - One of the more difficult issues that companies...Ch. 17 - Prob. 5CCh. 17 - Prob. 6CCh. 17 - Prob. 7CCh. 17 - Prob. 8CCh. 17 - Revenue for a company is recognized for accounting...Ch. 17 - Prob. 10C
Additional Business Textbook Solutions
Find more solutions based on key concepts
CHAPTER CASE
S&S Air’s Mortgage
Mark Sexton and Todd Story, the owners of S&S Air, Inc., were impressed by the ...
Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Mary Williams, owner of Williams Products, is evaluating whether to introduce a new product line. After thinkin...
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
How is activity-based costing useful for pricing decisions?
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
E6-14 Using accounting vocabulary
Learning Objective 1, 2
Match the accounting terms with the corresponding d...
Horngren's Accounting (12th Edition)
Assume you are a CFO of a company that is attempting to race additional capital to finance an expansion of its ...
Financial Accounting, Student Value Edition (5th Edition)
Fundamental and Enhancing Characteristics. Identify whether the following items are fundamental characteristics...
Intermediate Accounting (2nd Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On January 1, 2025, Cullumber Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $5,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Cullumber identifies two performance obligations and allocates $1,750 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $850; the shelves have a cost of $490. (a) Prepare the journal entry on January 1, 2025, for Cullumber. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date January 1, 2025 Account Titles and Explanation eTextbook and Media List of Accounts Debit Creditarrow_forwardCan you solve this with complete sokution. thank youarrow_forwardOn October 1, 2021, Richardson Inc. entered into a contract to deliver one of its specialty snowblowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $4,000 in advance on October 15, 2021. Kickapoo pays Richardson on October 15, 2021, and Richardson delivers the snowblower on October 22, 2021. Does this satisfy the requirements under Step 1 of ASC 606 that a contract exists? Explain your answer.arrow_forward
- On January 1, 20x1, Pongcuter Co. enters into a contract with a customer to grant a software licensefor ₱1,000,000. The fee is payable at contract inception. The license has a term of four years, toreckon from the date the customer can use the software. The customer can determine how andwhen to use the right without further performance by Pongcuter Co. and does not expect thatPongcuter Co. will undertake any activities that significantly affect the intellectual property towhich 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 onApril 1, 20x1. How should Pongcuter Co. recognize revenue from the fixed consideration in thecontract?a. in full on February 1, 20x1b. in full on April 1, 20x1c. deferred and amortized over four years starting on February 1, 20x1d. deferred and amortized over four years starting on April 1, 20x1arrow_forwardAn entity enters a contract with a customer and promises to grant a franchise license that provides the customer with the right to use the entity's trade name and sell the entity's product for ten years. The entity also promises to provide the equipment necessary to operate a franchise outlet. In exchange for granting the license, the entity receives a sales-based royalty of 5% of the customer's monthly sales. What is/are the performance obligation/s to be identified by the franchisor? a.Franchise license only b.Equipment license only c.Franchise license and equipment d.Right to use entity's trade name and sell the entity's productarrow_forwardOn January 1, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Gordon identifies two performance obligations and allocates $1,200 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $700; the shelves have a cost of $320. Instructions a. Prepare the journal entry on January 1, 2020, for Gordon. b. Prepare the journal entry on February 5, 2020, for Gordon when the wiring base is delivered to the customer. c. Prepare the journal entry on February 25, 2020, for Gordon when the shelving unit is delivered to the customer and Gordon receives full payment.arrow_forward
- ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC receives 1,000,000 in exchange for satisfying the following separate performance obligations: franchisees have a ten year right to operate as an ABC retail establishment once it started its operation; franchisees receive an ABC building and necessary equipment; franchisees receive initial training and certification as an ABC retail. The 1,000,000 is payable with a down payment of P500,000 on August 1, 2021 with the balance will be payable in five equal annual payments with an interest of 10% starting January 1, 2022. The stand-alone selling price of the initial training and certification is P100,000 and P400,000 for the building and equipment. ABC estimates that the stand-alone selling price of the ten-year right to operate as a franchise using the residual approach. ABC received P500,000 on August 1, 2021 from DDD, which represent the collection from the training, building and…arrow_forwardOn June 1, 2021, Consulting Inc. enters into a contract with a customer to build a website for its start-up business for $100,000, plus a possible performance bonus. The contract includes the creation of the website to communicate information about the customer’s products, to sell products, and to collect payment for the products. The target completion date for the project is October 22, 2021. The pricing of the customized website includes a potential performance bonus to be paid to Consulting Inc. if the website is completed between October 1 - October 22, 2021. The performance bonus will be reduced each week closer to the October 22, 2021 deadline. A bonus will not be paid if the project is completed after October 22, 2021. Based on Consulting Inc.’s historical experience and the assessment of its current capabilities, the potential bonuses/probability are summarized in the table below: Completion Date Probability of Outcome Performance Bonus October 1, 2021…arrow_forwardABC Franchisor entered into a franchise contract that will allow the franchisee to use ABC's copyright over a video. The contract is applicable for a period of 5 years. The transaction price is P100,00 cash to be paid on the date of grant. What is the journal entry to recognize the transaction price? [A] DR: Cash 100,000; CR: Franchise Revenue [B] DR: Cash - 100,000; CR: Contract Liability [C] DR: Contract Asset – 100,000; CR: Franchise Revenue [D] DR: Contract Asset – 100,000; CR: Contract Liabilityarrow_forward
- On May 1, 2020, Mount Company enters into a contract to transfer a product to Eric Company on September 30, 2020. It is agreed that Eric will pay the full price of $25,000 in advance on June 15, 2020. Eric pays on June 15, 2020, and Mount delivers the product on September 30, 2020. Prepare the journal entries required for Mount in 2020.arrow_forwardEngelhart Company licenses customer relationship software to Kristin Incorporated for 3 years. In addition to providing the software, Engelhart promises to provide consulting services over the life of the license to maintain operability within Kristin?s computer system. The total transaction is $210,000. Based on the standalone values, Engelhart estimates the consulting services have a value of $75,000 and the software license has a value of $135,000. Upon install on July 1, 2019, Kristin pays Engelhart $100,000; the balance of the contract is due December 31, 2019. Explain how you would account and determine the revenue for 2019, assuming (a) the performance obligations are interdependent and (b) the performance obligations are not interdependent.arrow_forwardDd.33.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Revenue recognition explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=816Q6pOaGv4;License: Standard Youtube License