Buff Media (BM) is a marketing company that offers a variety of marketing offerings to its customers. Specifically:

BM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent BM's charges for these items when BM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated (lien quan); that is, each functions independently of the other offerings.

If a customer purchases all aforementioned items together, the total cost is $1.5M.

Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at mid-point, 25 percent at completion).

If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to BM.

Raider, Inc., a customer, approaches BM with the hopes of reinventing its image to a younger customer base. Raider, Inc. has a verbal agreement with BM that is based on BM's unsigned quote to Raider, Inc. on November 30, 20X5, for one TV commercial, one app, and a Facebook page. The agreement creates enforceable rights and obligations pursuant to BM's customary business practices. None of these items can be redirected by BM to another customer. BM performed a credit check on Raider, Inc. and has determined that Raider, Inc. has the intention and ability to pay BM for fulfilling its portion of the contract. Raider, Inc. is required to pay BM for performance completed to date if Raider, Inc. cancels the contract with BM for reasons other than BM's failure to perform under the contract as promised.

Raider, Inc. makes a payment on November 30, 20X5, in the amount of $750K pursuant to the agreement. From the date of the quote, it takes BM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. BM does not think that the app will be downloaded 500K times in the first month because Raider, Inc.'s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, BM has determined that it takes over three months for Raider, Inc.'s users to begin to download its apps.

Required

BM's CFO is trying to understand the new revenue recognition model and has asked you to explain how BM would account for the above scenario under the new FASB standard on revenue from contracts with customers.