ABC Co. has three issues related to revenue recognition that they are concerned about the application of the proper accounting procedures. Each of these issues are independent of each other. The issues are:
1) ABC began selling items this year with a six-month return period.
2) ABC sells a product and allows customers to pay extra for installation and for a maintenance contract. The prices involved are:
a) Product alone $1,200
b) Product with installation only $1,300
c) Product with maintenance contract only $1,450
d) Product with both installation and maintenance contract $1,500
3) ABC began selling long-term maintenance contracts on products that it did not sell. ABC received full payment at time contract is signed.
Required: Briefly describe the accounting issue involved for each of the three items and specify guidance in the codification that ABC can rely on to know they are applying the proper accounting procedures in each case.