What amount should be reported as deferred service revenue

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Reference no: EM132827723

Question - Dunne Company sells equipment service contracts that cover two-year period. The sale price of each contract is P600.

The past experience is that, of the total peso spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. The entity sold 1,000 contract evenly throughout 2019.

1) What is the contract revenue for 2019?

A. 120,000

B. 240,000

C. 300,000

D. 150,000

2) What amount should be reported as deferred service revenue on December 31, 2019?

A. 540,000

B. 480,000

C. 360,000

D. 300,000

3) What is the contract revenue for 2020?

A. 180,000

B. 360,000

C. 300,000

D. 120,000

4) What is the contract revenue for 2021?

A. 240,000

B. 360,000

C. 180,000

D. 0

Reference no: EM132827723

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