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revenue recognition

This topic has 1 reply, 2 voices, and was last updated 15 years ago by MikeLittle.

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November 28, 2010 at 2:33 am #46319
bertha
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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 .
November 28, 2010 at 6:51 am #71863
MikeLittle
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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
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