Sao Paulo Trains Inc, incorporated in Brazil, manufactures high-speed trains. In this industry, the time to manufacture products usually exceeds one year. Assume that Sao Paulo Trains recently signed a €8 billion contract to provide 10 new high-speed trains to a customer in the European Union. The customer has paid a deposit of €500 million and will pay the remainder in equal installments

over the next four years. When should Sao Paulo Trains recognize the revenue from this contract?
a. at the time Sao Paulo Trains signs the contract and receives €500 million cash from the customer
b. assuming that Sao Paulo Trains can reliably estimate both the revenue from the contract and the costs to complete the contract, it will recognize revenue (as well as the costs associated with delivering on the contract) over the contract life.
c. Sao Paulo Trains will recognize all of the revenue (as well as all of the costs associated with delivering on the contract) at the completion of the contract
d. at the time Sao Paulo Trains signs the contract and receives the cash payments from the customer
e. none of the above


B

Business

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