how do you account for these in the financial statement- included in revenue is 16m for goods. the terms of sales are that sandow will incur ongoing and support cost of 1.2m per annum for three years. sandown normally make a gross profit of 40% on such service cost .
Depends if you can separate the goods from the ongoing costs to be invoiced. If you CAN separate, then recognise the goods value immediately ( I assume the 1.2m per year is NOT included in 16m ) and recognise the ongoing service charge as it occurs through the years