Review the Revenue Recognition footnote for Barnes & Noble shown below. Add lines as needed.

When B&N records sales with multiple elements it uses the relative selling price method. Assume that the NOOK device sells for $100 including the software. Similar devices sell for $90 without the software and similar software sells for $50.

1. Calculate the amount of revenue related to the device and the software (2nd paragraph of Revenue Recognition footnote.) Show your calculation.

2. The footnote indicates that the revenue from the software is recognized over a two-year period. Show the journal entry to record the sale of 70 NOOKs for cash. (Ignore the effect on inventory) (2nd paragraph of Revenue Recognition footnote.)

Date	Accounts	Debit	Credit

Calculations:

In accordance with ASC 605-25, Revenue Recognition, Multiple-Element Arrangements, and Accounting Standards Updates (ASU) 2009-13 and 2009-14, for multiple-element arrangements that involve tangible products that contain software that is essential to the tangible product's functionality, undelivered software elements that relate to the tangible product's essential software and other separable elements, the Company allocates revenue to all deliverables using the relative selling-price method Under this method, revenue is allocated at the time of sale to all deliverables based on their relative selling price using a specific hierarchy. The hierarchy is as follows: vendor specific objective evidence, third-party evidence of selling price, or best estimate of selling price. NOOK device revenue is recognized at the segment point of sale The Company includes post-service customer support (PCS) in the form of software updates and potential increased functionality on a when-and-if-available basis with the purchase of a NOOK from the Company. Using the relative selling-price method described above, the Company allocates revenue based on the best estimate of selling price for the deliverables as no vendor-specific objective evidence or third-party evidence exists for any of the elements. Revenue allocated to NOOK and the software essential to its functionality is recognized at the time of sale, provided all other conditions for revenue recognition are met. Revenue allocated to the PCS is deferred and recognized on a straight-line basis over the 2-year estimated life of a NOOKEB device. The average percentage of a NOOK's sales price that is deferred for undelivered items and recognized over its 2-year estimated life ranges between 0% and 5%, depending on the type of device sold. The amount of NOOK-related deferred revenue as of April 29, 2017 and April 30, 2016 was $226 and $160, respectively These amounts are classified on the Company's balance sheet in accrued liabilities for the portion that is subject to deferral for one year or less and other long-term liabilities for the portion that is subject to deferral for more than one year. The Company also pays certain vendors who distributed NOOK a commission on the content sales sold through that device. The Company accounted for these transactions as a reduction in the sales price of the NOOK based on historical trends of content sales and a liability was established for the estimated commission expected to be paid over the life of the product. The Company recognizes revenue of the content at the point of sale of the content