On January 1, 2021, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made
Question:
On January 1, 2021, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made on January 1, 2021, but payment for the equipment of $10,000 is not due until December 31, 2021. Assuming that Wooten views the time value of money to be a significant component of this transaction and that an 8% interest rate is applicable, how much sales revenue would Wooten recognize on January 1, 2021?
Step by Step Answer:
If payment occurs after delivery conceptually the arrangement includes a financing componentWhen the financing component is deemed to be significant receivables like those of Wooten we include an elem...View the full answer
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Related Video
The time value of money (TVM) is the concept that the money you have in your pocket today is worth more than the same amount would be if you received it in the future because of the profit it can earn during the interim.
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