Question

eLean is an online fitness community, offering access to workout routines, nutrition advice, and eLean coaches. Customerspay a $50 fee to become registered on the website. and then pay $5 per month for access to all eLean services. How manyperformance obligations exist in the implied contract when a customer registers for the services?

Answer 1

The answer is one performance obligations exists in the implied contract between Elean and its customers.

Step-by-step explanation:

In the described situation, the only obligation Elean owes its customer is the right to access to all services in a month once eLean receive their $5 payment.

Regarding the $50 fee to become registered on the website, it should not be recognized as Elean obligation because the forum has not committed to providing their registered members any specific goods or services in a specific time frame. From an accounting standpoint, this fee should be recorded in full once it is received rather than an unearned revenue (obligation) like the $5 payment to access to all eLean services in a month mentioning above.