Business, 19.09.2021 05:20, xmanavongrove55

IBM sold a mainframe computer to its customer for 60 monthly payments of $92,082.61, which totals $5,524,956.60. IBM also agreed to provide installation and training for the customer for no additional charges. According to the agreement the customer is not required to use IBM for installation and training. IBM estimated that the standalone installation and training sales prices are $50,000 and $68,000, respectively. IBM used a 4% annual interest rate in determining the 60 monthly payments. The customer decided to have IBM install and train its employees and IBM delivered the computer on July 1 and completed installation on October 31. Training will take place over the next 12 months. The date of delivery starts the customer's payment obligation to IBM and IBM's year end is December 31. Required:
a. What date may IBM recognize revenue from this transaction?
b. What is the total revenue amount and the related revenue component amounts IBM may recognize on the date specified in answer A?
c. How much interest income (revenue) will IBM recognize in its December 31 regular income statement from this transaction?

Answers: 2

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IBM sold a mainframe computer to its customer for 60 monthly payments of $92,082.61, which totals $5...