1.A New York City daily newspaper called "Manhattan Today" charges an annual subscription fee of $150. Customers prepay their subscriptions, and receive 260 issues for an annual subscription. To attract more subscribers, the company offered new subscribers a coupon to receive a 40 percent discount on a ride through Central Park on a horse drawn carriage. The list price of a carriage ride is $130 per hour. The company estimates that approximately 30% of the vouchers will be redeemed.
Required:
1. Can Manhattan Today recognize any of the $150 subscription fee as revenue upon receipt? Explain.
2. When will Manhattan Today recognize revenue associated with the $150 subscription price?
3. What separate performance obligations exist in this contract?
4. Prepare the journal entry to recognize sale of one new subscription, clearly identifying the revenue or unearned revenue associated with each distinct performance obligation.