Moran Consulting currently provides tax services to Weiss Inc. Weiss engages Moran to advise it on the sale of one of its subsidiaries. Moran Consulting receives a non-refundable, up- front retainer fee of $ 100,000. Moran is also entitled to a success fee of 1.5% of the proceeds received when the subsidiary is sold.
Required
a. Should Moran combine the tax services contract with the advisory contract?
b. Identify the performance obligations in the advisory contract.
c. Determine the transaction price at the inception of the advisory contract.
d. Determine the allocation of the transaction price in the performance obligation.
e. Determine when to recognize revenue.