Case Study Case Study One year ago, Sarah started a new business, House Tech, with her husband, Paul. They came up with an innovative business strategy, taking a unique approach to interior design. Their goal was to give customers an IKEA-like "feel" to what their home might look like, but with the use of virtual reality and their home. It started with an idea to take virtual reality goggles into customers homes so they could see how a renovation may look. Sarah takes a high-definition camera to her initial no-cost, no-obligations meeting with customers and records the tour of the house with explanations of what her customers want done. Then, her and Paul watch the footage and make virtual modifications, adding their own expertise to the customer's vision along with specific products they can build or buy. Sarah meets with the customers again and shows them what their home may look like with the virtual reality goggles. Nearly always, the customers are amazed by the experience and agree to the work done with little or no alterations. Some customers are more insistent on sticking with exactly what they envisioned, but Sarah is always happy to help them realize their dreams. She estimates that in 95% of cases, she does end up securing immediate work. A small portion of the homeowners end up contacting her in coming weeks or months for the same work she quoted earlier. Most of the work is done by the couple, but they do hire contractors for certain jobs. On average, contractors accounted for 35% of the costs last year, while purchased appliances and furniture made up 55%. The remaining 10% was for other supplies, small tools, and materials for projects. Sarah estimates that there is a profit margin of 30% on each job, but she has not taken vehicle expenses into account. Paul suspects this expense will total $2,000 a month (they use the vehicles for personal errands 20% of the time). She wonders if they might be overlooking other expenses as well. Sarah is specifically wondering what the correct accounting treatment for the high-end technology Case Study Case Study One year ago, Sarah started a new business, House Tech, with her husband, Paul. They came up with an innovative business strategy, taking a unique approach to interior design. Their goal was to give customers an IKEA-like "feel" to what their home might look like, but with the use of virtual reality and their home. It started with an idea to take virtual reality goggles into customers homes so they could see how a renovation may look. Sarah takes a high-definition camera to her initial no-cost, no-obligations meeting with customers and records the tour of the house with explanations of what her customers want done. Then, her and Paul watch the footage and make virtual modifications, adding their own expertise to the customer's vision along with specific products they can build or buy. Sarah meets with the customers again and shows them what their home may look like with the virtual reality goggles. Nearly always, the customers are amazed by the experience and agree to the work done with little or no alterations. Some customers are more insistent on sticking with exactly what they envisioned, but Sarah is always happy to help them realize their dreams. She estimates that in 95% of cases, she does end up securing immediate work. A small portion of the homeowners end up contacting her in coming weeks or months for the same work she quoted earlier. Most of the work is done by the couple, but they do hire contractors for certain jobs. On average, contractors accounted for 35% of the costs last year, while purchased appliances and furniture made up 55%. The remaining 10% was for other supplies, small tools, and materials for projects. Sarah estimates that there is a profit margin of 30% on each job, but she has not taken vehicle expenses into account. Paul suspects this expense will total $2,000 a month (they use the vehicles for personal errands 20% of the time). She wonders if they might be overlooking other expenses as well. Sarah is specifically wondering what the correct accounting treatment for the high-end technology