Question

Saar Associates sells two licenses to Kim & Company on September 1, 2021. First, in exchange for $100,000, Saar provides Kim with a copy of its proprietary investment management software, which Saar does not anticipate updating and which Kim can use permanently. Second, in exchange for $90,000, Saar provides Kim with a three-year right to market Kim's financial advisory services under the name of Saar Associates, which Saar advertises on an ongoing basis. How much revenue will Saar recognize in 2021 under this arrangement? (Do not round intermediate calculation.) Revenue

Answer 1

$110,000 revenue will Saar recognise in 2021 under this arrangement

Solution:

First, in exchange for $100,000

Second, in exchange for $90,000

Saar provides Kim with a three-year right to market Kim's financial advisory services under the name of Saar Associates , Whereas to calculate the revenue :  $\frac{4}{36}$ = $\frac{1}{9}$ ( 90,000)

So , 100,000 + 10,000 = 110,000