Orange, Inc., sells a LearnIt-Plus software package that consists of their norma

Question

Orange, Inc., sells a LearnIt-Plus software package that consists of their normal LearnIt math tutorial program along with a one-year subscription to the online LearnIt Office Hours virtual classroom. LearnIt-Plus retails for $350. When sold separately, the LearnIt math tutorial sells for $360, and access to the LearnIt Office Hours sells for $240 per year. How much revenue will be recognized upon delivery of the LearnIt software? How much revenue will be deferred and recognized over the life of the one-year period in which the Office Hours are delivered? If Orange did not sell the LearnIt Office Hours separately, but believed it would price it at $240 per year. How much revenue will be recognized upon delivery of the LearnIt software? How much revenue will be deferred and recognized over the life of the one-year period in which the Office Hours are delivered?

Explanation / Answer

a)Total revenue if sold seperately = 360+240 = 600

Revenue recognised at time of delievery = 350 *360 /600 = $ 210

b)revenue deferred over one year period = 350 *240 /600 = 140

c) Revenue recognised immediately if learnlt software is not sold seperately = $ 350

d)Revenue deferred = $ 0 as the package is not sold seperately and thus is a combo package which has to purchased if normal learnlt is purchased .

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