Question
Assume F&S offers a deal whereby enrolling in a new membership for $700 provides a year of unlimited access to facilities and also entitles the
Assume F&S offers a deal whereby enrolling in a new membership for $700 provides a year of unlimited
access to facilities and also entitles the member to receive a voucher redeemable for 25% off yoga classes for
one year. The yoga classes are offered to gym members as well as to the general public. A new membership
normally sells for $720, and a one-year enrollment in yoga classes sells for an additional $500. F&S estimates
that approximately 40% of the vouchers will be redeemed. F&S offers a 10% discount on all one-year enrollments in classes as part of its normal promotion strategy.
a. How many performance obligations are included in the new member deal?
b. How much of the contract price would be allocated to each performance obligation? Explain your answer.
c. Prepare the journal entry to recognize revenue for the sale of a new membership. Clearly identify revenue
or deferred revenue associated with each performance obligation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started