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Eon Pharmaceutical Corporation licenses to a customer, Lama Inc., its patent rights to an approved...

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Accounting

Eon Pharmaceutical Corporation licenses to a customer, Lama Inc., its patent rights to an approved drug compound for 10 years and also promises to manufacture the drug for Lama. The drug is a mature product; therefore, Eon will not undertake any activities to support the drug, which is consistent with its customary business practices. Eon is identifying the performance obligations in the contract with Lama.

REQUIRED Identify the performance obligations in Eons contract with Lama and consider whether there are any differences if:

(a) No other entity can manufacture this drug because of the highly specialized nature of the manufacturing process; and

(b) The manufacturing process used to produce the drug is not unique or specialized and several other entities can also manufacture the drug for Lama.

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