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Kestral Corporation manufactures precision surgical equipment for hospitals. It also provides training, installation, and maintenance. The installation and maintenance activities can be performed by other companies. However, these are unique pieces of equipment and only Kestral can provide the training. Training occurs at the time of installation. If the facility wants untrained physicians to use the equipment, the hospital must provide training. Installation takes approximately two days. Maintenance contracts run for a period of 10 years. How many performance obligations exist under a contract between Kestral and a hospital for the purchase of equipments, training, installation, and maintenance? Clearly explain the number of obligations, what is included in each, and the time frame over which the revenue would be recognized.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92723302

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