Chapter 4, Problem 4.3DC

1.

To determine

Introduction: A company records all the revenue and expenses pertaining to accounting period in an income statement to compute the net income for the said period. It is one of four major financial statements that a company prepares each accounting year.

To state: The reason for recognizing revenue over the life of the contract.

2.

To determine

Introduction: A company records all the revenue and expenses pertaining to accounting period in an income statement to compute the net income for the said period. It is one of four major financial statements that a company prepares each accounting year.

To compute: The revenue recognition from service contract for year 1, year 2 and year, and to recognize the account that shows the unrealized service contract amount in financial statements.