B6. ZM Motors (henceforth "ZM") entered into a contract with a customer, Mr Mxenge. As per the contract, ZM will deliver avehicle to Mr Mxenge on 1 March 2023. The vehicle comes with a "free" 3-year maintenance plan. The services the vehicleand replaces worn parts every six months starting on 30 September 2023. As per the contract, Mr Maitland will pay ZM aonce off amount of R800 000 on 28 February 2025.ZM sells similar vehicles a standalone price of R750 000, which is a comparable to the price charged by is competitors.ZM also sells maintenance contracts at a standalone price of R100 000. Identical maintenance plans can also be boughtfrom ZM's competitor's.A market related interest rate is 11%.True of false, ZM will recognise revenue of R635 930 on 1 March 2023?TrueFalse

The given price for the vehicle is R800,000 But the price would be paid on 28 February 2025 And the…

Answered: True of false, ZM will recognise…

Business

Accounting

True of false, ZM will recognise revenue of R635 930 on 1 March 2023?

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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Question

B6.

ZM Motors (henceforth "ZM") entered into a contract with a customer, Mr Mxenge. As per the contract, ZM will deliver a
vehicle to Mr Mxenge on 1 March 2023. The vehicle comes with a "free" 3-year maintenance plan. The services the vehicle
and replaces worn parts every six months starting on 30 September 2023. As per the contract, Mr Maitland will pay ZM a
once off amount of R800 000 on 28 February 2025.
ZM sells similar vehicles a standalone price of R750 000, which is a comparable to the price charged by is competitors.
ZM also sells maintenance contracts at a standalone price of R100 000. Identical maintenance plans can also be bought
from ZM's competitor's.
A market related interest rate is 11%.
True of false, ZM will recognise revenue of R635 930 on 1 March 2023?
True
False

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