Question 19: On 31 Dec, 2014, Merigo Co sold goods to a customer for $ 10 million, representing a mark-up on cost of 25%; in order to encourage sales, Merigo Co has given the customer interest free credit with the total amount becoming payable in three years time. Interest rates are currently 4% per annum, meaning that the present value of $ 10 million is $8.9 million and the present value of $ 8 million is $7.1 million. What amount should Merigo Co record as revenue in the statement of profit or loss for the year ended 31 December 2014?

Question 19: On 31 Dec, 2014, Merigo Co sold goods to a customer for $ 10 million, representing a mark-up on cost of 25%; in order to encourage sales, Merigo Co has given the customer interest free credit with the total amount becoming payable in three years time. Interest rates are currently 4% per annum, meaning that the present value of $ 10 million is $8.9 million and the present value of $ 8 million is $7.1 million. What amount should Merigo Co record as revenue in the statement of profit or loss for the year ended 31 December 2014?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 13P

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