Part I:

Butler High School announced on February 12^th, 2019 that they will be updating the high school scoreboards. The school has 3 scoreboards; one for the basketball gym (indoors), second for the baseball field (outdoors) and the third for the football fields (outdoors). The school decided to hire Sports Scoreboards Inc. (SSI) for the building and installation of the scoreboards for a total price of $1,250,000. SI develops unique scoreboards and is the only company that can do the installation of their products. SSI also sells installation services for scoreboards that are purchased from competitors. Butler High School has excellent credit and both parties signed the agreement stipulating the payment terms and that SSI will build and install the scoreboards.

	Installation Deadline/Timetable	Standalone Pricing
Baseball Scoreboard	April 1st, 2019	300,000
Football Scoreboard	July 1st, 2019	700,000
Basketball Scoreboard	October 1st, 2019	400,000
Installation		100,000
Warranty		108,000

SSIs pricing includes a 12 month warranty. Butler High School also elects to purchase a 3 year extended warranty for $90,000 for a total purchase price of $1,340,000.

As an incentive to ensure the installation of the baseball scoreboard prior to the start of the baseball season Butler has offered the following incentive to SSI:

Completion of installation by March 15^th, 2019: $30,000 Bonus

Completion of installation by March 22^nd, 2019: $20,000 Bonus

Completion of installation by March 29^th, 2019: $10,000 Bonus

On time completion: $0 Bonus

SSI estimates that based upon their significant experience in the industry that they have a 25% likelihood of completing the installation by March 15^th, 60% likelihood of completion by March 22^nd, 10% likelihood the installation will be completed by March 29^th, and 5% likelihood it will be will be completed on time (i.e. April 1st).

The total payment for the project is due on December 1^st, 2020. Interest rates on comparable projects are 6% and is equal to $75,000. SSIs fiscal year is January 1-December 31 and is privately held.

Required:

1. Apply the requirements of revenue from contracts with customers. Make sure you apply the detailed guidance from the codification.

2. For each of the five steps:

Describe how the revenue model applies to this transaction. If any step that is not applicable simply indicate that it is not applicable. Clearly label all of your work.

3. Determine the amount/timing of revenue that should be recognized and provide any necessary journal entry/(ies).

Part II.

LimeBike is a start-up founded in 2017 located in San Mateo, California. Its mission is to make shared bicycles accessible and affordable. The company has taken the basic idea of shared bicycles and eliminated the need to return the bike to a docking station, which may not be near the cyclists destination. LimeBike charges $1 per 30 minutes of riding, or $0.50 per ride for students.

To use LimeBike, you first use the LimeBike app to locate one of the citrus-colored bikes near your location. Once you are at the bike, you scan the QR code on the bike or enter the bikes plate number into the app to unlock the bike. When you are finished using the bike, you park the bike by a bike rack or post anywhere that is legal and visible. Once you press down the back wheel lock, the trip is finalized and your payment is processed all within the LimeBike app.

Accounting Issue: How should Lime Bike record the expenditures incurred for the development of the app for locating, paying, and returning bikes? Use the codification to find the authoritative guidance to support your decision.

Codification Reference: _______________________

Guidance: (cut and paste the guidance)

Your answer for how the expenditures will be recorded: _____________________