General rules under us gaap are for this transaction

Reference no: EM13184513

JK Software (JKS), a public company with quarterly reporting, signed a contract with JR Gardens on November 1, 2009. The contract sets forth the arrangements wherein JKS sells JR Gardens software and provides post-contract support (PCS). The agreement stipulates that the software will be delivered on December 15, 2009, and the PCS will commence on January 1, 2010, and continue through December 31, 2010. The software will be fully functional at delivery. The sales price that is stated in the agreement for this combined product is $500,000 and is to be paid upon delivery of the software.
JKS has never sold software without also providing PCS. Likewise, they do not provide PCS without having also sold the client the software. In addition, they have no plans of separating these services in the future. Other vendors have sold similar software for the following amounts:
Vendor Software PSC
AB $ 400,000 $ 250,000
CD $ 500,000 $ 50,000
EF $ 400,000 $ 200,000
GH $ 300,000 $ 300,000
The costs related to both the software and the PCS arrangement are significant and easily measurable.
Required
a) Discuss what the general rules under US GAAP are for this transaction. Relevant literature is SOP 97-2 (ASC 985-605), Software Revenue Recognition. When, and how much, revenue is recognized by JK Software under US GAAP? Please provide all necessary journal entries.

Reference no: EM13184513

Questions Cloud

The senate has two members,or senators : The senate has two members,or senators, per state. only the senior senator of state can participate in senate debates, the number of senators per state is determined by a strict system called apportionment

Understanding interpersonal communication : Understanding Interpersonal Communication, the author lays out many psychological concepts concerning the “self.” How do all these concepts relate to interpersonal communication? Also, give an example of how your “self-concept,” “self-image,” or “sel..

Learning effective interpersonal communication skills : Many people believe that communication skills are easy and should come naturally. As we have learned this week, learning effective interpersonal communication skills require a lot of time and practice. Of all the skills listed in Chapter Two of Makin..

Evaluate alternative or replacement applications : Describe in detail the process to evaluate alternative or replacement applications for existing technologies.

General rules under us gaap are for this transaction : Discuss what the general rules under US GAAP are for this transaction. Relevant literature is SOP 97-2 (ASC 985-605), Software Revenue Recognition. When, and how much, revenue is recognized by JK Software under US GAAP? Please provide all necessary j..

Develop a training program : As a food service manager, what do we need to develop a training program? In other words, what do we need to cover in these trainings?

Postulates that rocks on both sides of the fault store : This postulates that rocks on both sides of the fault store the energy of plate displacement by bending until their elastic strength is exceeded and they rupture and return to their former unstressed state.

Security professional has hundreds of tools-crime-terrorism : The security professional has hundreds of tools available to ensure that perimeters and interiors of facilities are adequately protected from crime, terrorism, and other malicious activity.

Local struggl-major event of the cold war : How did a local struggle in Vietnam turn into a major event of the Cold War, what differing opinions did Americans have about U.S. involvement in the Vietnam War?

User Account

All Pages