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On May 1, 2016, Varga Tech Services signed a $120,000 consulting contract with S

ID: 2509728 • Letter: O

Question

On May 1, 2016, Varga Tech Services signed a $120,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2016, to April 30, 2017, with Shaffer paying the entire $120,000 on May 1, 2016.

On May 1, 2016, Varga Tech Services signed a $120,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2016, to April 30, 2017, with Shaffer paying the entire $120,000 on May 1, 2016.

How much revenue should Varga recognize in 2016? (Do not round intermediate calculation.)

Explanation / Answer

Calculate revenue recongnize in 2016 :

Revenue recognize in 2016 = 120000*8/12 = 80000

so $80000 revenue should varga recognize in 2016

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