Continuing Case Solution
Chapter 18
(a)
Memorandum
2. Revenue from services rendered is recognized when services have
been performed even if the billing has not occurred.
3.
4. Revenue from disposing of assets other than products is recognized at
the date of sale.
FASB ASC 605-10-25-1 states that the recognition of revenue and gains
involves consideration of two factors: (1) the revenue being realized or
realizable and (2) the revenue being earned.
12
985-605-25-30 through 25-40).
FASB ASC 985-605-25-44 states that software upgrade rights, sold along
25-5 and -6). Thus, the vendor must determine the fair value of the
25-3 through 985-605-25-14. In practical terms, this means the entity
must defer recognition of revenue on upgrades until those upgrades are
delivered and the customer accepts them.
Continuing Case Solution
(b)
subsequently remitted to governmental authorities.
Revenue for retail packaged products, products licensed to original equipment manufacturers
recognized as products are shipped or made available. Revenue for products under technology
guarantee programs, which provide free or significantly discounted rights to use upcoming new
versions of a software product if an end user licenses existing versions of the product during the
evidence of fair value does not exist for the upgrades/enhancements is recognized on a straight–
line basis over the estimated life of the software.
Revenue related to our Xbox 360 gaming and entertainment console, Kinect for Xbox 360, games
published by us, and other hardware components is generally recognized when ownership is
transferred to the resellers. Revenue related to games published by third parties for use on the