Revenue Recognition Model Fuzzy Communications is a satellite television provider. On October 15, Fuzzy entered into...

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Revenue Recognition Model Fuzzy Communications is a satellite television provider. On October 15, Fuzzy entered into a contract with Joe Subscriber to sell and install satellite TV equipment and provide 2-years of satellite TV service for $4,800. Subscriber agreed to pay Fuzzy $200 per month for the next two years, with the first payment due on November 30. At Subscriber's option, the equipment would be installed by Fuzzy at no charge, or Subscriber could obtain third-party installation - a typical satellite installation would cost about $150. The satellite equipment was installed by Fuzzy on November 1. The satellite equipment, if sold separately, has a fair market value of $500 and the fair value of 2-years of television service is $4,800. Required: How much revenue should Fuzzy recognize and when should it be recognized? Step 1: On what date does a contract exist between Fuzzy and Subscriber? Step 2: What are Fuzzy's performance obligations in the contract? Step 3: What is the transaction price? Step 4: Does this transaction price need to be allocated? If so, perform the allocation. Revenue Recognition Model Fuzzy Communications is a satellite television provider. On October 15, Fuzzy entered into a contract with Joe Subscriber to sell and install satellite TV equipment and provide 2-years of satellite TV service for $4,800. Subscriber agreed to pay Fuzzy $200 per month for the next two years, with the first payment due on November 30. At Subscriber's option, the equipment would be installed by Fuzzy at no charge, or Subscriber could obtain third-party installation - a typical satellite installation would cost about $150. The satellite equipment was installed by Fuzzy on November 1. The satellite equipment, if sold separately, has a fair market value of $500 and the fair value of 2-years of television service is $4,800. Required: How much revenue should Fuzzy recognize and when should it be recognized? Step 1: On what date does a contract exist between Fuzzy and Subscriber? Step 2: What are Fuzzy's performance obligations in the contract? Step 3: What is the transaction price? Step 4: Does this transaction price need to be allocated? If so, perform the allocation.

Answer rating: 100% (QA)

Step 1 A contract exists between Fuzzy and Subscriber on October 15 when they agreed to the terms of ... View the full answer