Case Study: The Five-Step Revenue Model

Reading Passage

TechFlow Inc. enters into a contract with a customer to provide a software license, installation services, and two years of technical support. The software is functional without the installation, and the installation is not complex. The total contract price is $100,000. TechFlow usually sells the license for $80,000, installation for $10,000, and support for $20,000.
Question 1 of 5

How many performance obligations exist in this contract?

Question 2 of 5

Under ASC 606, what is the second step of the revenue recognition model?

Question 3 of 5

What is the standalone selling price total of all items?

Question 4 of 5

When should the revenue for the software license be recognized?

Question 5 of 5

How should the $100,000 price be allocated to the software license?

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