Hardy Hearts is a health spa located in a rapidly growing suburban area populated largely by young professionals. Like other spas, memberships are its lifeblood. Typical of its contracts is the one it sold on January 1 to Felicia Footer, a young CPA. She agreed to an $850 contract for a 2-year initial membership, paid the usual $45 down payment, and signed a note for 23 monthly installments of $35 each. Hardy Hearts then sold the note without recourse to a local bank for $640. As part of the initial membership agreement, Hardy Hearts provides new members with an evaluation of their physical conditioning needs and tailors personalized programs to suit those needs. The spa then periodically assesses each member's program, charts progress to date, and suggests adjustments and modifications as appropriate. However, the employees of Hardy Hearts have little if any specific training in physical fitness. Member interest in Hardy Hearts wanes quickly. About three-fourths of new members use the spa's facilities regularly for only the first three months; afterwards, their usage is sporadic or nonexistent, with few renewing their memberships. As a result, Hardy Hearts sells many more memberships at lower prices than otherwise would be possible by "overselling" the spa's physical capacity. Hardy Hearts spends 40 percent of its membership revenue on sales commissions and other direct selling efforts and maintains its facilities in "showroom" condition (the added cost for which is not readily determinable). Other expenses are largely fixed (rent, depreciation, utilities, and so forth) and involve making the facility available for use by its members. Those costs average $10 per month per contract, or $240 over a 2-year membership. The membership contracts contain a clause permitting Hardy Hearts to assign its obligations to its members to any subsequent owner of the facility. Although changes in ownership are not frequent, the industry's "rule of thumb" is for the buyer of the facility to charge the seller about $12 per month per membership for any remaining obligations for which the buyer assumes responsibility.

Question: How should Hardy Hearts recognize income from Footer's membership in each of the two years?