Judgment Case 5–3 Satisfaction of performance obligations • LO5–2 Cutler Education Corporation developed a software product to help children under age 12 learn mathematics. The software contains two separate parts: Basic Level (Level I) and Intermediate Level (Level II). Parents purchase each level separately and are eligible to purchase the access code for Level II only if their children pass the Level I exam. Kerry purchases the Level I software at a price of $50 for his son, Tom, on December 1. Suppose Tom passed the Level I test on December 10, and Kerry immediately purchased the access code for Level II for an additional $30. Cutler provided Kerry with the access code to Level II on December 20. Required: When would Cutler recognize revenue for the sale of Level I and Level II software?
Judgment Case 5–3 Satisfaction of performance obligations • LO5–2 Cutler Education Corporation developed a software product to help children under age 12 learn mathematics. The software contains two separate parts: Basic Level (Level I) and Intermediate Level (Level II). Parents purchase each level separately and are eligible to purchase the access code for Level II only if their children pass the Level I exam. Kerry purchases the Level I software at a price of $50 for his son, Tom, on December 1. Suppose Tom passed the Level I test on December 10, and Kerry immediately purchased the access code for Level II for an additional $30. Cutler provided Kerry with the access code to Level II on December 20. Required: When would Cutler recognize revenue for the sale of Level I and Level II software?
Solution Summary: The author explains the revenue recognition principle for the sale of Level I and Level II software.
Cutler Education Corporation developed a software product to help children under age 12 learn mathematics. The software contains two separate parts: Basic Level (Level I) and Intermediate Level (Level II). Parents purchase each level separately and are eligible to purchase the access code for Level II only if their children pass the Level I exam.
Kerry purchases the Level I software at a price of $50 for his son, Tom, on December 1. Suppose Tom passed the Level I test on December 10, and Kerry immediately purchased the access code for Level II for an additional $30. Cutler provided Kerry with the access code to Level II on December 20.
Required:
When would Cutler recognize revenue for the sale of Level I and Level II software?
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