You have just been hired by DoJida Company, a start-up pharmaceutical company based in Research Triangle Park, NC. The company performs research on a new medication for a large, publicly traded drug company that is also based in North Carolina. Dr. Bruce Jennings, CEO of DoJida, has signed a contract with the drug company to perform testing on Goaxilite. DoJida will earn $290 per hour of research and $8,000,000 in milestone consideration if Goaxilite is successfully approved in initial FDA trials.

Dr. Jennings expects that testing will take 70,000 hours to complete, and the initial FDA trials to be completed after 50,000 hours. During 2013, the year the contract began, DoJida performed 55,000 hours of testing and was able to successfully complete the initial FDA trial. For 2013, DoJida has received $23,950,000: $15,950,000 for 55,000 hours of testing and $8,000,000 for meeting the milestone of a successful FDA trial. DoJida expects that the remaining 15,000 hours of testing will be completed in 2014 and that it will receive an additional $4,350,000 during the next year.

Dr. Jennings wants to know how much revenue should be recognized during each year. Directions

Research the GAAP and prepare a short memo to Dr. Bruce Jennings that summarizes the milestone method of revenue recognition and reports how much revenue DoJida can recognize each year. Cite your reference(s) and applicable paragraph numbers.