Revenue Recognition Case Multiple Contracts

You've been hired by SlipStream Inc., a rapidly growing privately held company. After experiencing rapid growth, they're interested in an IPO. SlipStream Inc. understands that to do so$,$ their accounting function will need to be performed in accordance with GAAP. They've hired you to evaluate several major contracts and advise them on how to handle the revenue recognition for these contracts in accordance with ASC $606.$ More information about the company, their products and their contracts are below.

SlipStream Inc. manufactures various exercise equipment. Their most popular product is the Swift Spin Bike that includes a screen which enables users to access on$-$demand cycling workouts over the internet. The Swift Spin Bike System includes the physical Swift Spin Bike as well as a one$-$year subscription to the SlipStream Platform, which allows users to access on$-$demand video workouts via their Swift Spin Bike or via other digital devices.

SlipStream sells individual Swift Spin Bikes for $$1,500.$ Customers can use the Swift Spin Bike to access on$-$demand workouts via the SlipStream Platform. Customers can also use the Swift Spin Bike like a more traditional bike without on$-$demand workouts. In other words, customers can still use the bike to exercise without a subscription.

SlipStream also sells individual one$-$year subscriptions to the SlipStreate Platform for S$480.$ Customers can access the SlipStream Platform using a Swift Spin Bike or using other digital devices such as a tablet, phone or television to access the workouts.

As a package deal, SlipStream sells the Swift Spin Bike System $($Bike plus one year subscription$)$ for $$1,800.$

Contract with HomeAway

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