Question

E. License of Symbolic IP: The Ultimate Frisbee League (UFL) licenses its trademark to Tank-Skin Apparel. Under the license arrangement, Tank-Skin pays the UFL a S1 mlion license fee plus a bonus when annual sales of Tank-Skin merchandise reach a threshold. The license agreement is for 4 years. How much of the S1 million license fee should the UFL recognize as revenue in the first year of the contract?

Answer 1

Tenure of contract is four years, hence UFL should recognize $0.25 million as revenue in the first year of contract i. e. $1 million divided over 4 years' period.