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21 June, 02:31

On May 1, 2021, Varga Tech Services signed a $18,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2021, to April 30, 2022, with Shaffer paying the entire $18,000 on May 1, 2021. How much revenue should Varga recognize in 2021?

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  1. 21 June, 02:59
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    The correct answer is $12,060.

    Explanation:

    According to the scenario, the given data are as follows:

    Varga tech total revenue = $18,0000

    Contract date = May. 1, 2021

    So, remaining months in completion of 2021 = May - Dec = 8 months

    So, we can calculate the Varga revenue by using following method:

    Varga revenue in 2021 = Total revenue * Remaining month : Total months

    By putting the value, we get

    Varga revenue = $18,000 * 8 : 12

    = $18,000 * 0.67

    = $12,060
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