Are any of the costs incurred by satellite deferrable

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Reference no: EM133378907

Case: Satellite TV Company sells receivers and satellite dishes and provides satellite television programming to customers. Satellite enters into a transaction with Customer M (M) where M purchases a satellite dish and receiver and signs a contract to receive one year of satellite programming years (expected customer relationship period is three years). M installs the

satellite dish and receiver itself. Amounts to be paid by M include a $50 upfront, nonrefundable fee and $18 per month for the duration of the contract (the $18 per month charges are legally enforceable). The costs incurred by Satellite include: 1) $150 related to its purchase of the receiver and satellite dish from a third party. 2) $100 commission paid to an internal employee dedicated solely to selling activities.

Question 1: Are any of the costs incurred by Satellite deferrable and why? If so, over what period? Question 2: Perform the Realizability Test.

Reference no: EM133378907

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