Can you please thoroughly explain how to work this out, thank you.
Q1. Hillgado Company provides process-control software to a customer under a 4-year license with software upgrades over the life of the license. The total transaction price is $100,000. Standalone prices of the software and the license are $80,000 and $20,000, respectively. Upon successful installation and testing of the software on January 1, 2017, the customer pays $70,000. The contract balance of $30,000 is paid as required under the contract on July 01, 2017. (a) Assume that the contract contains a single performance obligation (i.e., the software and the ongoing upgrades are interrelated and interdependent). REQ: (a-1) Make all journal entries by Hillgado for 2017 and 2018. Date each entry and show any required calculations. (a-2) How much total revenue should Hillgado recognize in 2017? Show calculations. (a-1) (a-2) (b) Now assume that the software and the ongoing upgrades to the software are properly viewed as separate performance obligations. Also assume that the installation and testing of the software fully satisfies the software obligation. REQ: (b-1) How much total revenue should Hillgado recognize in 2017? (b-2) Make all journal entries by Hillgado for 2017 and 2018. Date each entry and show any required calculations. Show calculations as needed. (b-1). Calculations: (5-2) Q1. Hillgado Company provides process-control software to a customer under a 4-year license with software upgrades over the life of the license. The total transaction price is $100,000. Standalone prices of the software and the license are $80,000 and $20,000, respectively. Upon successful installation and testing of the software on January 1, 2017, the customer pays $70,000. The contract balance of $30,000 is paid as required under the contract on July 01, 2017. (a) Assume that the contract contains a single performance obligation (i.e., the software and the ongoing upgrades are interrelated and interdependent). REQ: (a-1) Make all journal entries by Hillgado for 2017 and 2018. Date each entry and show any required calculations. (a-2) How much total revenue should Hillgado recognize in 2017? Show calculations. (a-1) (a-2) (b) Now assume that the software and the ongoing upgrades to the software are properly viewed as separate performance obligations. Also assume that the installation and testing of the software fully satisfies the software obligation. REQ: (b-1) How much total revenue should Hillgado recognize in 2017? (b-2) Make all journal entries by Hillgado for 2017 and 2018. Date each entry and show any required calculations. Show calculations as needed. (b-1). Calculations: (5-2)
