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ment is an Required a. What period of time should Alexis Inc, use to amortize the commission costs? Explain. b. If instead the contract was a 12-month contract, would the accounting treatment for commission ental cost of obtaining the contract and recognizes an asset for the commissions pa id, Costs LO9 change assuming that the cost of commissions will be recovered over the contract period? Explain. r. How would our answer to a change if Alexis instead concluded that the cost of commissions woud recovered over the contract period? Problems Answer the requirements for each of the following cases involving four distinct industries: real estate, lelecome munication, pharmaceutical, and healthcare. Evaluating the Validity of a Contract (Rights and Collectibility) LO2 a. Real Estate Industry. A stated contract price on a real estate contract is $1,000,000. A price concession expected of $100,000 on the contract price. In evaluating the validity of a contract, is the $1,000,000 ae tract price or the price net of the price concession ($900,000) considered in evaluating the probability d collectibility on the contract? Telecommunication Industry. the length of the contract. A telecommunication company arranges for a prepaid, month-to-month, celi contract with a customer. The customer pays for a month of cellular service on the first day of the servie period. A typical customer will remain on the month-to-month contract for a two-year period. In evalg the validity of a contract, what is the length of contract? h. In determining the validity of a contract, it will be important to determin c. Pharmaceutical Industry. A pharmaceutical company leases a medical device to a customer over a year period. In addition, the pharmaceutical company provides training services over the initial period. How is this contract evaluated under the revenue recognition standard? d. Healthcare Industry. A hospital treats a patient in an emergency situation for services with a retail of $10,000. Due to the seriousness of the injury, the hospital was unable to evaluate the patient's in ability to pay for the services at the time the services were provided. Is a valid contract in place the provider fulfilled its obligations to provide services to the patient? Problem 7-81 Accounting for Upfront Fees and Recording CharterX Inc. establishes a contract with a customer to deliver both a cable television receiv cable television service for 15 months. In exchange, the customer pays a $75 upfront fee ucable television receiver (which must be returned to CharterX Inc, at the end of the contract term) and S

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