Question 1 - Zack developed software that helps farmers to plow their fields in a manner that prevents erosion and maximizes the effectiveness of irrigation. Sparky paid a licensing fee of $60,000 for a copy of the software. Although Sparky can use the software as long as it wants, Zack expects that Sparky will use the software for approximately 5 years. Zack will not have any continuing involvement with Sparky following transfer of the license. How much revenue should Zack recognize in the first year of the contract?
$12,000
$15,000
$60,000
$ 0
Question 2 -Which of the following is not true?
License fees are recognized over time for any license that is viewed as providing a right of access.
Licensing fees are recognized as revenue over time for any licenses for which the seller expects its ongoing activities to affect the benefits that the buyer receives from intellectual property.
License fees are recognized as revenue at a point in time if the buyer expects that the seller's future activities will not affect the benefit the buyer derives from the intellectual property.
Licensing fees always are recognized as revenue at the end of the license period, when the seller has completed its performance obligation to provide access to its intellectual property.