Question 12An entity sells equipment service contractsthat cover a two year period. The sale priceof each contract is P800. The entity sold1000 contracts evenly throughout 2019.The past experience is that, of the total pesosspent for the repairs on service contracts,40% is incurred evenly during the firstcontract year and 60% evenly during thesecond contract year.What is the contract revenue for 2019?

Contract revenue is the revenue earned by the company by working on long-term contracts. The…

Answered: An entity sells equipment service…

Business

Accounting

An entity sells equipment service contracts that cover a two year period. The sale price

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

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