Question

The Miller-Porter company sells powder coating equipment at a sales price of $50,000 per unit. The sales price includes delivery, installation, and initial testing of the equipment, as well as a monthly service call for one year in which a technician checks to make sure that the equipment is working properly and makes adjustments as needed. After the first year, customers are given the opportunity to enter into an extended service agreement; Miller-Porter prices these extended service agreements to earn an expected gross profit of 50 percent. Given the wages paid to technicians and the time required to make a service call, the company estimates that the cost of providing each monthly service call is $200.

Required:
Develop a revenue recognition policy consistent with IAS 18 for The Miller-Porter company for its sales of power coating equipment



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  • CreatedAugust 26, 2013
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