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yaroslaw [1]
3 years ago
7

Neakanie Industries sells specialized mountain bikes. Each specialized bike purchased includes free maintenance service for 12 m

onths. The price of the specialized bike is $1,400. When sold separately, a maintenance contract is $600 and a comparable but non-specialized bike is $1,000. What amount of revenue will Neakanie recognize at the date of sale for each bike?
Business
1 answer:
Ede4ka [16]3 years ago
6 0

$875 is the amount of revenue that will be recognized.

<u>Explanation:</u>

Entire price for specialized bike will be appropriated in the ratio of individual prices of the non- specialized bikes and the maintenance contract.

The following calculation is made to calculate the revenue from the sale of a bike:

= 1400 multiply with  (1000 divide by 1600)

After solving the above equation we get,

= $875  will be recognized by Neakanie at the date of sale.

Hence, the correct option will be with an amount of $875

Note: a maintenance contract is $600 and a comparable but non-specialized bike is $1,000 when added sums to $1600 amount.

 

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Some of the missing data is defined in the attached file, please find it.

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3 years ago
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