Netflix signs a contract with NBC granting Netflix the right to stream The Office. The contract states that Netflix is entitled to stream all prior episodes and all future episodes of The Office released over the next five years. At the time the contract is signed, NBC has already released 100 episodes of The Office and will release an additional 50 episodes of The Office over the next two years. The contract requires Netflix to pay $300 million to NBC in five equal payments over a five-year period. Netflix should: Group of answer choices Recognize neither an asset nor a liability for this contract. Record each payment as an asset and a liability only after the payment is made to NBC. Expense the full $300 million on the income statement on the date the contract is signed. Record the $300 million as both an asset and a liability when the contract is signed.
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Netflix signs a contract with NBC granting Netflix the right to stream The Office. The contract states that Netflix is entitled to stream all prior episodes and all future episodes of The Office released over the next five years. At the time the contract is signed, NBC has already released 100 episodes of The Office and will release an additional 50 episodes of The Office over the next two years. The contract requires Netflix to pay $300 million to NBC in five equal payments over a five-year period. Netflix should: Group of answer choices Recognize neither an asset nor a liability for this contract. Record each payment as an asset and a liability only after the payment is made to NBC. Expense the full $300 million on the income statement on the date the contract is signed. Record the $300 million as both an asset and a liability when the contract is signed.
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