How much revenue should the company recognize in 20x2

Reference no: EM133371205

Question: The Software Services commence on July 1, 20X1, and continue through December 31, 20X1. The Processing Services commence on January 1, 20X2, and continue for a term of five years. The contract requires the Bank to pay the Company nonrefundable fees of $3 million at the commencement of the Software Services (i.e., on July 1, 20X1) and $3 million over the period in which the Company will provide the Processing Services (i.e., equal monthly installments between January 1, 20X2, and December 31, 20X7). Neither party has a unilateral option to extend the contract, but the parties are free to negotiate an extension if desired.

A. What journal entry should the Company record on July 1, 20X1? Explain with supportive documentation.
B. How much revenue should the Company recognize in 20X2? Explain with supportive documentation.

Reference no: EM133371205

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