On May 1, 2021 Race Cars Inc. enters into a contract with a major U.S. racing program to design and distribute training equipment. Under the terms of the contract, Race Cars will deliver the training equipment on August 1, 2022. The customer will pay $300,000 to Race Cars, Inc. on May 15, 2021. Interest incurred on similar financing agreements in the industry is $35,000. What is the transaction price Which should Race Cars, Inc. recognize: interest expense or interest income for this transaction?
On May 1, 2021 Race Cars Inc. enters into a contract with a major U.S. racing program to design and distribute training equipment. Under the terms of the contract, Race Cars will deliver the training equipment on August 1, 2022. The customer will pay $300,000 to Race Cars, Inc. on May 15, 2021. Interest incurred on similar financing agreements in the industry is $35,000. What is the transaction price Which should Race Cars, Inc. recognize: interest expense or interest income for this transaction?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On May 1, 2021 Race Cars Inc. enters into a contract with a major U.S. racing program to design and distribute training equipment. Under the terms of the contract, Race Cars will deliver the training equipment on August 1, 2022. The customer will pay $300,000 to Race Cars, Inc. on May 15, 2021. Interest incurred on similar financing agreements in the industry is $35,000.
What is the transaction price
Which should Race Cars, Inc. recognize: interest expense or interest income for this transaction?
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