1.Sparky Associates sells two licenses to Kim & Company

1.Sparky Associates sells two licenses to Kim & Company on September 1, 2016. First, in exchange for $100,000, Sparky provides Kim with a copy of its proprietary investment management software, which Sparky does not anticipate updating and which Kim can use permanently. Second, in exchange for $90,000, Sparky provides Kim with a three-year right to market Kim’s financial advisory services under the name of Sparky Associates, which Sparky advertises on an ongoing basis. How much revenue will Sparky recognize in 2016 under this arrangement?

2.The following data relates to a construction job started by Sparky Company during 2016:

Total Contract Price
$100,000
Actual costs incurred during 2016
20,000
Estimated remaining costs
40,000
Billed to customer during 2016
30,000
Received from customer during 2016
10,000
Assuming that Sparky recognizes revenue over time according to percentage of completion, how much should Sparky recognize as gross profit for 2016?

$0
$13,333
$33,333
$26,667

3.Video Planet (VP) sells a big screen TV package consisting of a 60-inch HDTV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer’s home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,700, sells the remote separately for $100, and offers the installation service separately for $200. The entire package sells for $1,900.

Determine how much revenue should be allocated to each of the following components:

TV $
Remote $
Installation Service $