Question
Company A is a marketing company that offers a variety of marketing options. They will create a Commercial for 1 mil, develop an app for
Company A is a marketing company that offers a variety of marketing options. They will create a Commercial for 1 mil, develop an app for 500K, make a FB page for 250K (all individually priced). If the customer buys all 3 they get it for 1.5 mil (PMT: 50% due at signing, remaining 50% paid over development period (25% mid and 25% end)). If App gets downloaded 500 times or more in the first month, there is a one time bonus of 250 K payable to company A.
Company B Approaches Co. A and puts down 750K takes six months from quote date to produce tv commercial, 2 weeks to finish fb page and 3 months to make app function fully. Co. A doesnt think the app will be downloaded 500K times in first three months.
HOW SHOULD COMPANY A ACCOUNT FOR THIS OFFERING WITH COMPANY B UNDER THE NEW REVENUE RECOGNITION MODEL? AND HOW WOULD IT CHANGE IF THE APP WAS DOWNLOADED MORE THAN 500K TIMES IN FIRST MONTH ??? PLEASE EXPLAIN IN WORDS!!!
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