FINANCIAL ACCOUNTING: TOOL
FINANCIAL ACCOUNTING: TOOL
9th Edition
ISBN: 9781119598305
Author: Kimmel
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 9, Problem 26Q
To determine

Useful life of an asset: The useful life of an asset represents the time period, that the company estimates the asset to be operationally efficient, to be able to generate revenue.

To explain: the implications for comparing the results from two different useful life estimated to depreciate the plant assets, by two companies.

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Thor Computer Systems Inc. maintains office equipment under contract. The contracts are for labour only; customers must reimburse Thor for parts. Thor's rate schedule follows:     One year Two years Three years Photocopies $220 $400 $620 Fax machine  175  340  440   Thor's 2026 sales of maintenance agreements is set out below:     One year Two years Three years Photocopies 20 12 30 Fax machine 24 20 30   Required What amount of revenue will Thor recognize for the year ended December 31, 2026? What amount of deferred revenue will Thor report as a current liability on December 31, 2026? What amount of deferred revenue will Thor report as a non-current liability on December 31, 2026?
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