Q. 2.Assuming the contract is valid, prepare the following financial analyses:

a.make a budget of expected minimum revenues under the contract.Show the sources of revenues from the set of five films and the fee.

b.What are the general revenue recognition criteria established under Generally Accepted Accounting Principles (GAAP)

c.How would you apply the GAAP criteria for revenue recognition to account for the revenues under this contract?Explain your logic for both realizable and earned.

d.Using the logic you developed in part c, calculate the revenue that CHAMELEON NETWORK should report for the set of five films for the year ended 12/31/2006.

e.For the year ended 12/31/2006, make a schedule that shows the cash flows received from Giant from the contract.

f.Why do cash flows and revenues recognized differ, if they differ under your calculations?

Based on this information

July 2018, Chameleon Network entered into an exclusive contract with Spotlight Theaters, Inc.(Spotlight), a large theater chain with approximately 490theaters across the United States.This contractprovided in part as follows:

Agreement: Spotlightis granted the right, license, and permission to display the five films listed herein duringthe contract period. In consideration of this contract, Chameleon Network will receive:

1.A contract (arrangement) fee of$6,000,000, payable $3,000,000 upon contract signature and$3,000,000 on September 1, 2018.

2.$600 for each film showing in each location. Contract period:

The contract period shall be the six months commencing on September 1, 2018

.

Limitation on screenings: Spotlight agrees to show Ultimate Adventuresno more than 42 times per theaterand the four accompanying films (UAII,UAIII,UA IV and UAV) no fewer than 18 times each per theater.

at the signing of the contract, Spotlight paid $3,000,000 of the $6,000,000.

Spotlight sent checks to Chameleon Networkfor $3,000,000 on September 1, 2018, and $6,489,000 onJanuary 20, 2019, along with an audited statement detailing the number of showings as of December 31,2018.The following is a summary of that information:

Film

Number of Showing. Amount Due

Ultimate Adventures8,490 $5,094,000

UAII-V 2,325 1,395,000

Total 10,815 $6,489,000