Accounting for Upfront Fees and Recording and Allocating Revenue

CharterX Inc. establishes a contract with a customer to deliver both a cable television receiver $($equipment$)$ and cable television service for $15$ months. In exchange, the customer pays a $$450$ upfront fee for installation of the cable television receiver $($which must be returned to CharterX Inc. at the end of the contract term$)$ and pays $$480$ a month for the premium package of $200+$ channels. The $$450$ upfront fee has no standalone selling price as it is not sold separately. The $$480$ charge per month for cable services is at its standalone selling price. The company has determined that the contract for the receiver is not a lease.

Required $$

Part A

b$.$ CharterX Inc. also offers a bundled package where a customer receives the $15-$month cable subscription $($and cable television receiver$)$ along with an internet connection for an upfront fee of $$450$ plus $$600$ a month $($stated to the customer as $$480$ per month for cable service, and an additional $$120$ per month for internet service$).$ The standalone selling price of the internet connection is $$240$ per month.

$(1)$ How many performance obligations are established in the revenue contract?

$(2)$ Record the entry by the seller at the initiation of the contract assuming $100$ new customers sign up for the bundled option.

$\backslash$table$[[$Account Name,Dr$.,$Cr$.],[,0,0],[,0,0],[$To record customer upfront fee,,$]]$

$(3)$ First, complete the table that follows, entering the transaction price, standalone selling price, and allocated transaction price for the entire, $15-$month contract life. Next, record the entry by the seller, one month after initiation of the contract.

$\backslash$table$[[$Account Name,Dr$.,$Cr$.],[,0,0],[,0,0],[{}^{},0,0],[,0,0],[$To record revenue,,$]]$