Reported in income for the period ending month

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Reference no: EM131452608

Assume Home Depot sold a warranty contract for a table saw on January 1, 2016. Thewarranty contract provides that Home Depot will repair or replace the saw if the customer hasany mechanical problems with the saw for 3 years from the date of purchase. The customerpaid $360 for the warranty contract. How much (if any) of the $360 collected by Home Depotwill be reported in income for the period ending January 31, 2016? How much (if any) will bereported as income in future accounting periods? Why do you believe Home Depot shouldreport the revenue in this manner? If Home Depot does not report all of this revenue as incomein the accounting period ending January 31, 2016, where would the unreported revenue bereflected on the balance sheet at 1/31/16?

Reference no: EM131452608

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