Question

Deloitte provides proprietary software to its clients. One of its software packages sells for $200 and contains pre-programmed tutorials on basic accounting concepts. Another package sells for $3,000 and contains Deloitte's archive of accounting standards and articles, which Deloitte updates regularly and downloads to archive users for the two years following purchase of the product. If a customer purchases both software packages on June 1, 2020, how much revenue should Deloitte recognize for the year?

Answer 1

$3,000 is for 2 years (24 months) service. Out of 24 months 7 months service is provided from June 2020 to Dec 2020.

Revenue to be recognised:

= $200 + ($3,000 X 7/24)

= $1,075

Option c.