At the end of 11 months, the system is fully operational. The system has been tested and accepted by SM. The old surveillance equipment was decommissioned when the new system was installed. The old equipment was shipped to EYE SPY in month 11. The old surveillance equipment was sold the next month for $120,000. For the sake of simplicity, no financing component needs to be allocated to the maintenance contract.

Requirements:

► Review ASC 606-25-27 through 30; ASC 606-10-32-14, 42 and 43; and also ASC 606-55-248-250.

► Perform step five of the revenue recognition model and recognized revenue as performance obligations are satisfied. Provide a detailed analysis to support your conclusion.

► Record any required journal entries for revenue, deferred costs, etc., through the 11th and 12th months of the contract. Prepare any required, updated “T” accounts.

– Note: While some journal entries may have been recorded monthly, for purposes of this case, show the cumulative journal entry recorded through the 11th and 12th months. Show all calculations.

 

Answer rating: 100% (QA)

11 According to ASC606 Step 1 of revenue recognition is to identify contracts with customers Here a ... View the full answer