Modern Equipment Corp. manufactures special- purpose machines for use in the mining industry. In late April, the company received an order from Kross Mining Company (KMC) for a special-purpose machine to be delivered in two months. The specific events related to the production of this machine are shown below. April 29 KMC placed an order for a special- purpose machine to be manufactured and delivered in two months. May 3 Raw materials and components are ordered so that the machine can be manufactured.
May 4 Modern Equipment receives written confirmation of the order from KMC.
May 12 Manufacture of the machine is completed.
May 13 The machine is shipped to KMC.
May 14 KMC receives the machine.
May 15 Modern Equipment receives written confirmation that the machine was delivered to KMC.
May 16 An invoice is sent to KMC.
June 16 KMC receives free after- sales service for the machine.
June 19 A cheque is received from KMC in full payment.
June 25 The cheque is cleared by the bank.
Required
When should Modern Equipment Corp. recognize revenue from the sale of the machine? Explain.