Question
ABC Ltd, a SaaS company sells customers a subscription service. It entered into a contract with Customer A to provide services at $36k for
ABC Ltd, a SaaS company sells customers a subscription service. It entered into a contract with Customer A to provide services at $36k for 12 months starting March 1, 2022. The entire fee needs to be paid in advance upon signing the contract. a) Suggest accounting of the said transaction in March 2022 and April 2022? b) If ABC Ltd decides to invoice and collect the $36k at the end of the subscription period, what would be the change in answer (a) above? c) Suppose the customer is also supposed to pay $5,000 towards implementation costs. These charges are to be paid up-front as one-time charges. How do you suggest we recognise revenue earned from implementation costs charged to the customer? How does this affect the way we account for the expense incurred by the company on implementation?
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