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I have come across this adjustment of Revenue and can’t understand it.
Revenue 380,000
Sandown’s revenue includes $16 million for goods sold to Pending on 1 October 2008. The terms of the sale are that Sandown will incur ongoing service and support costs of $1·2 million per annum for three years after the sale. Sandown normally makes a gross profit of 40% on such servicing and support work. Ignore the time value of money.How do I calculate this? And how will the elements related to this be treated in the Statement of Profit or loss and Statement of Financial position.
Thanks a lot.
Arooba, I’ve just posted a long reply to your question on leases. All the time I was typing that response I was saying to myself
“This is all in the course notes. Why am I doing this? This student does not appear to want to work through the course notes, nor follow the video lectures, nor work through the mini-exercises at the end of the course notes! But, OK, I’ll help out with this leases question (even though the student has not given me full information!)”
And now I come to this post of yours!
There is a video recording of my answer to Sandown – here’s the link:
https://opentuition.com/acca/f7/acca-f7-revision-kit/
If you click on the first line of that page and then scroll down, you’ll come to:
ACCA F7 December 2009 Question 2 Sandown
Follow that video and then, if you still have a problem, post again
🙂
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