Lemon Corporation and Morley, Inc., have entered into an arrangement whereby Lemon will

supply materials and 1,000 hours of its scientists time for a project to be undertaken at

Morleys research facility in Austin, TX. Morley will also contribute its scientists time to the

project.

Required:

For each of the following independent scenarios, does Lemon have a contract with a customer

subject to ASC Topic 606?

1. Lemon has agreed to provide materials and scientists time in exchange for a payment

from Morley based on the quantities of each resource contributed.

2. Lemon has agreed to provide materials and scientists time in exchange for a

percentage of the profits from the sale of the product developed jointly by Lemon

and Morley.