A contracting company divides each of its orders into five stages: (1) on order; (2) on despatch;

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A contracting company divides each of its orders into five stages: (1) on order; (2) on despatch; (3) on installation; (4) on commissioning; and (5) on completion of a 12-

month warranty period. Assume that an order for Contract A (worth £100,000) is signed on 1 January 2004 and the warranty period ends on 31 December 2006. In which accounting period or periods would you treat the £100,000 as revenue (i.e. sales)?

Would it be appropriate to apportion it over the three years of the contract?

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