Software Services or Processing Services .The Loan Platform is delivered to the Bank as a service in the form of the Processing Services .That is, no software license is transferred to the Bank . The Software Services commence on July 1, 2DX1 , and continue through December 31, 203(1 . The Processing Services commence on January 1, 20x2 J and continue for a term of five years . The contract requires the Bank to pay the Company nonrefundable fees of $3 million at the commencement of the Software Services {i.e.. on July 1, 2DX1 land 53 million over the period in which the Company will provide the Processing Services {i.e., equal monthly installments between January 1, ZDXZ , and December 31, 20X? }. Neither party has a unilateral option to extend the contract , but the parties are free to negotiate an extension if desired The Company concludes the following 1. The provisions of FASB Accounting Standards Update {ASU } No.2014 09,Revenue From Contracts With Customers {Topic 506],and related amendments are effective for the Company 2. The Company's customer ,as dened in FASB Accounting Standards Codication [AS C) Subtopic 606 1D. Revenue From Contracts With Customers Overall,is the Bank[as opposed to the mortgage loan applicants ]I. 3. The arrangement is within the scope of ASC 506 -1l] and meets the criteria in ASC 6061C! - 25-1 to be considered a contract with a customer -'-i-. Any explicit or implicit promises other than the Software Services and the Processing Services are immaterial in the context of the contract and need not be considered 5. The total transaction price , as described in ASC 606 10323, is the sum of the contractually stated fees {i.e.,$5 million 1]. 6. The Software Services are required to be performed to create the customized Loan Platform that the Company will use to provide the Processing Services to the Bank . In other words , the Software Services are integral to the Bank's ability to derive its intended benefit from the Processing Services The Bank does not derive value from the Software Services :rather ,it derives value from the Processing Services .However ,the Processing Services cannot begin until the Software Services are complete {i.e., until a Loan Platform that meets the Bank's specications has been developed ]. Required 1. Do the Software Services constitute a performance obligation , as defined in ASC 606 10? 2. How much revenue ,if anyyshould the Company recognize through December 31,20X1