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Enterprise Solutions Inc. licenses its productivity software to Blackmon Company for $100,000, payable at contract inception. Enterprise agrees to provide semiannual software upgrades over the 5-year length of the contract to enable Blackmon to benefit from any technological advancement. Enterprise concludes that the software license is not distinct from the promised upgrades. Required: What journal entries are necessary for Enterprise to account for this transaction

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Tundexigo

Answer:

Date    Account Titles & Explanation           Debit         Credit

Jan 1    Cash                                                 $100,000

                   Unearned Revenue                                     $100,000

            (To record the contract consideration in advance)

Dec 31  Unearned Revenue                         $20,000

                     Sales Revenue                                            $20,000

                     ($100,000/5 years)

             (To record the annual expired transaction revenue)

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