Mad Men, Inc. (“Mad Men”) is an that assists its customers in . Mad Men’s fiscal year ends on December 31st.
JonHamm, Inc. (“JHI”) entered into a with Mad Men on to develop one TV commercial, one cellphone application, and a Facebook page for a total price of $1,500,000, which represents a off the of these products (i.e., if purchased separately, customers would pay $1,000,000 for the TV commercial, $500,000 for the cellphone application, and $250,000 for the Facebook page). These products are JHI-specific, meaning that the The TV commercial, cellphone application, and the Facebook page are ; that is, each functions . In addition, the agreement specifies that if the cellphone application is downloaded 500,000 times or more in following delivery to JHI, there is a $250,000 payable to Mad Men.
Payment terms are , 25% due at mid-point of the development process, and 25% due at completion. The agreement creates enforceable rights and obligations pursuant to Mad Men’s customary business practices. Mad Men has a long-standing business relationship with JHI and believes that JHI has the ability and intention to pay Mad Men for fulfilling its performance obligations under the agreement. JHI is required to pay Mad Men for work completed to date if JHI cancels the contract for reasons other than Mad Men’s failure to perform under the contract as promised.
JHI pays $750,000 to Mad Men on December 30, 2017 but does not sign the contract until January 2, 2018. Mad Men expects it will take six month to produce the TV commercial, two weeks to complete the Facebook page, and three months to complete the cell phone application. Mad Men believes there is a 60% chance that the cellphone application will be downloaded 500,000 times or more in the first post-delivery month, and a 40% chance that downloads in that month will be less than 500,000.
1. How should Mad Men account for this transaction under ASC 606? Please provide enough detail so that Mad Men’s revenue accountant will know exactly how to recognize the contract revenue and when to recognize that revenue.
They have a magnificent team. These people are always kind and willing to listen to your concerns or issues. Better yet, your assignment is always ready before the time, they usually send you a draft to double-check before they finalize your paper.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more