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What is the contract revenue for 2020? 2. What amount should be reported as deferred contract revenue on December 31, 2020

What is the contract revenue for 2020? 2. What amount should be reported as deferred contract revenue on December 31, 2020

FINANCIAL ACCOUNTING
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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1. What is the contract revenue for 2020?

2. What amount should be reported as deferred contract revenue on December 31, 2020?

Dunne Company sells equipment service contracts that cover a two-year period. The sale price of each contract is P600. The past experience is that, of the total pesos spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. The entity sold 1,500 contracts evenly throughout 2020.
Transcribed Image Text:Dunne Company sells equipment service contracts that cover a two-year period. The sale price of each contract is P600. The past experience is that, of the total pesos spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. The entity sold 1,500 contracts evenly throughout 2020.
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