Reference no: EM132610875
Question - Summarized balances at the end of third quarter:
Current Asset $6,500.00
Non-current Asset $23,500,00
Current liabilities $5,100,000
Non-current liabilities $13,100,000
Shareholders' equity $11,800,000
During the third quarter, Izaad Co. completed a deal with one of the Canadian territories to supply outdoor recycling bins. The final design is based on an existing Izaad Co. product that has been modified to meet the rigours of the cold Canadian winters in the far north. No Izaad Co. product has ever been used under these conditions but the company tested the product extensively in the extreme-weather facility at the University of Ontario Institute of Technology, and management is confident that the product is well designed for the conditions. Izaad Co. has provided the territory a two-winter guarantee that it will replace any bins that are broken or damaged due to weather conditions. The contract price is $750,000 and the bins cost $475,000. The revenue was recognized in the third quarter. Izaad expects payment for the bins within 60 days of the end of the quarter. Does Izaad co recognized the revenue third quarter as company provide 2 years winter guarantee. If 2 year gurantee affect the income how you present income statement and balance sheet and how does impact co. current ratio and debt to equity ratio.