Question - On January 2, 2015, Early Enterprises and Rowan Industries enter into a contract under which Early licenses software to Rowan for a four-year period. Early also agrees to provide consulting services to Rowan for the life of the license to maintain operability of Rowan's information system. The total transaction price is $1,000,000; Early estimates the software license to have a stand-alone value of $200,000 and the consulting services to have a stand-alone value of $800,000. The software installation is completed on June 30, 2015, at which time Early starts to provide the consulting services. Rowan pays $1,000,000 in cash on June 30, 2015.
a) If the software license and the consulting services are interdependent, how much revenue does Early record in 2015? (Journal entries are not required).
b) If the software license and the consulting services are not interdependent, how much revenue does Early record in 2015? (Journal entries are not required).