Problem
The Depp Advisory Division provides asset-management services. This division grew out of Van Hatten's own treasury and asset-management operations, which several of its customers asked to have access to. On January 1, 2023, Depp entered into a contract with Scutaro Co. to perform asset-management services for one year. Depp receives a quarterly management fee of 0.25% on Scutaro's assets under management at the end of each quarter. In addition, Depp receives a performance-based incentive fee of 20% of the fund's annual return in excess of the return on the S&P 500 index at the end of the year. At the end of the first quarter of 2023, Depp was managing $2.4 million of Scutaro assets. The annualized return on the portfolio was 6.2%. (The S&P 500 index had an annualized return of 5.7%.)
Calculate the revenue to be recognized in the first quarter of 2023 for Depp.