Assume that on the first day of Year 1, Chuck Laboratory Systems, Inc. signs a contract with the state of California under which Chuck Laboratory Systems will provide the state with:

Computer equipment, to be delivered in Year 1, that cost Chuck $200,000 Computer software, written by Chuck Systems, to be delivered in Year 1 A promise to provide maintenance and software support for three years The total contract price is $1,000,000. Chuck Systems estimates that, if it sold these services separately, it would have charged $250,000 for the computer equipment, $800,000 for the software, and $150,000 for the maintenance and support services.
A. Compute the amounts of revenue that Chuck Systems should allocate to:

a. The computer equipment

b. The software

c. The maintenance and support services B. Compute the total amounts of revenue that Chuck Systems should recognize in:

a. Year 1

b. Year 2

c. Year 3