MediaWizards (MW) is a marketing company that offers a variety of marketing offerings to its customers.

Specifically: MM will create a TV commercial for $1,000,000, build an app for $500,000, and build a Facebook page for $250,000. These amounts represent MMs charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated.

If a customer purchases all three items as a package, the transaction price is $1,250,000. MW expects to receive 50 percent of the transaction price when the contract is signed. The remaining 50 percent is expected in two payments, one at the midpoint of the development period, the other at the completion of the contract obligations.

The contract includes a one-time bonus payment to MW of $175,000 If the app is downloaded 300,000 times or more in the first month.

Marble Works, a new customer, approached MW with the hopes of reinventing its image to a younger customer base. Marble Works has a verbal agreement with MW that is based on MWs unsigned quote to Marble Works on August 30, 2019, for one TV commercial, one app, and a Facebook page for $1,400,000 and payment terms identical to those described above. The agreement creates enforceable rights and obligations pursuant to MWs customary business practices. MW performed a credit check on Marble Works and has determined that Marble Works has the intention and ability to pay MW for fulfilling its contractual obligations.

Marble Works is required to pay MW for work completed to date if Marble Works cancels the contract with MW for reasons other than MWs failure to perform under the contract as promised. Marble Works made a payment on August 30, 2019, in the amount of $700,000 (50% of the total consideration of $1,400,000) pursuant to the agreement. It takes MW six months from the contract date to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete the app. MM does not think the app will be downloaded 300,000 times in the first month because Marble Works customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MW has determined that it takes over three months for Marble Works users to begin to download its apps.

As MediaWizards chief accountant its up to you to work through the five steps of the ASC 606 revenue recognition process. Please do so in a properly formatted memo of no more than one page. You must cite specific sections of the ASC to receive full credit for the assignment.