Identify all performance obligations in the contract.

Indirect TV (Indirect or the Company) is a satellite TV provider with a December 31 yearend. When a customer signs a two-year agreement for the Ultimate Package, the customer receives:

1) Programming for two years a) Requires payment of $75 per month for the first 12 months. b) After the initial year, the normal rate for this programming of $128 per month goes into effect.

2) Premium channels for the first 6 months a) After the 6 months, the premium channels cost the customer $60 per month. There is zero incremental cost for one subscriber to the premium channels. b) If the customer does not call and cancel, the premium channels are automatically continued and the $60 per month is added to the bill. Approximately, 40% of the customers cancel the premium channels after the free trial period.

3) Satellite dish a) The dish remains the property of Indirect but is permanently installed at the customers residence. If the customer cancels or defaults on services within the contract period, Indirect requires the dish be returned. While the contract requires the return of the dish even after the contract period, as a normal business practice, after the two years, Indirect does not repossess the dish because the cost of retrieving the dish outweighs the benefits. b) The dish is not sold separately by Indirect or other vendors, but Indirects best estimate of the fair value is $250 (though without programming, it is only a paperweight) and costs Indirect $156.

4) Installation of the dish a) Installation is fairly straightforward and can be done by the customer, an independent contractor, or an Indirect installer. b) Indirect has employees who are full-time installers, but installers pay is not broken down by job and the services are not sold separately, so Indirect can estimate the cost, not the sales value, of installation. However, based on an estimated markup, Indirects best estimate of the sales value for the installation is $460 per installation. There are third parties authorized to install the Indirect system and the third party installers charge, on average, $490 for each installation.

5) HD-DVR Cable box a) The cable box is leased from Indirect for $10 per month. b) The cable box must be returned to Indirect upon cancellation of services at any time. Normal business practice requires the customer to return the cable box when services are cancelled even after the 2-year contract has expired. c) There is not an active market for the cable box, but Indirect estimates its fair value to be $300, and it costs Indirect $180.

6) Activation of the system a) All new customers are charged a $63 activation fee. Cable services are always paid for in advance of services provided. Therefore, at the time a contract is signed, the customer is charged for the activation fee and first months services, resulting in $148 ($63 activation fee, $10 cable box, and $75 programming fee) being collected upon completion of installation. The early termination fee is $480 if the customer cancels any time within the two year contract period. Because of this steep fee, cancellation seldom occurs.