On July 1, 2008, Quincy Company sold a piece of industrial equipment to Tana Company for S200. The equipment cost Quincy $80,000 to manufacture. Per the sales agreement, Tana made a 20% down payment and paid the remaining balance in four equal quarterly installments plus 10% on the unpaid balance, starting October 1, 2008.
Required:
L. Identify and explain three alternative methods for revenue and cost recognition available to Quincy in this scenario, 2. Calculate the amount of gross profit recognized in 2008 under each of the alternatives identified in requirement 1.
3. Elaborate on what circumstances would have to exist for each alternative to be employed.