Day Company licenses accounting software and provides training and support, both separately and as bundled service packages. It charges $150,000 for licensing and $30,000 per year for training and support. However, Day offers discounts ranging from 10% to 20% for customers who contract for both. On July 1, 2018, Day licenses the software to Night Company under an agreement that includes training and support as well as updates to the software for the duration of the three-year contract. The total contract price is $200,000, and Night pays half that amount at signing. The contract stipulates that the remaining half cannot be billed until Night has had six months to assess both the softwares continued suitability for the companys needs and Nights satisfaction with the quality of Days training and support services.

Required prepare the journal entry(s), if any, that Day should record under FASB ASC 606 on July 1, 2018, briefly explaining your rationale:

The software is functional at the time that Day transfers the license to Night and is not expected to change substantially throughout the license period. Updates to the software ordinarily relate to security and refinements. While they improve the software, they do not alter its basic functionality. These updates are typically made every 18 months or so, and the next one is scheduled for June of 2019. Although updates are not sold separately from the software, Day believes that their value is approximately $10,000. Night is a repeat customer and so is experienced with the software. Therefore, Day expects Nights usage of the training and support services will remain fairly steady throughout the three-year contract period.