Assume that Bombardier Inc. signs a contract to sell light-rail-transit (LRT) vehicles to the Region of Waterloo for a total price of $ 15 million. Included is a two year extended warranty valued at $1,500,000.Without the extended warranties the vehicles would sell for $14,000,000.

Instructions

Using this transaction as an example, illustrate the five steps in the revenue recognition process for Bombardier (State the step and use the information in the question to discuss / comment on the step criteria as outlined below).