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Pages:
1 pages/≈275 words
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1
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
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MS Word
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Total cost:
$ 4.68
Topic:
AF-U4D- company's financial statements.
Essay Instructions:
Abe Technologies provides maintenance service for computers and office equipment for companies throughout the Northeast. The sales manager is elated because she closed a $300,000, 3-year maintenance contract on December 29, 2016, two days before the company's year-end. “Now we will hit this year's net income target for sure,” she crowed. The customer is required to pay $100,000 on December 29 (the day the deal was closed). Two more payments of $100,000 each are also required on December 29, 2017 and 2018.
Discuss the effect that this event will have on the company's financial statements.
Essay Sample Content Preview:
AF-U4D- COMPANY'S FINANCIAL STATEMENTS.
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AF-U4D- COMPANY'S FINANCIAL STATEMENTS.
To begin with, this will be the event’s impact on the company’s income statement. In December 2016, the firm will recognize $100,000 as revenue. This recognition will represent payment received from the client and will be recorded as accounts receivable (Edmonds, Miller, & Savage, 2019). The remaining $200,000 of the contract’s value will remain unrecognized as revenue for the same year. This will result because the contract runs for three years. In 2017 and 2018, the firm will recognize $100,000 of revenue per year as the service is offered to the customer.
The company’s event will affect the balance sheet in the...
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