Required1. Assume that you buy a wide-screen television from Sears for $2500 inc
admin / July 3, 2018
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Required1. Assume that you buy a wide-screen television from Sears for $2500 including a $180 service contract that will cover three years. Why does Sears recognize the revenue associated with the service contract over its life even though cash is received at the time of the sale?2. How much revenue will Sears recognize from your purchase of the television and the service contract in Years 1 2 and 3? (Assume a straight-line approach.) What corresponding account can you look for in the financial statements to determine the amount of service contract revenue that will be recognized in the future? Making Financial Decisions
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