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I have a query on the above subject:
We are in projects business (supply and installation of equipment). We have a set of customers who do not specify payment terms even though in practice payment happens within 90 days of completion of the project.
We recognize revenue at various points in time during the project period but payment process will begin only upon completion of the entire project.
Consequently, the time gap between revenue recognition and payment, depending on the project duration, may be more than a year.
In such a case, is it necessary to discount revenue for financing component?
Thanks
We are in projects business (supply and installation of equipment). We have a set of customers who do not specify payment terms even though in practice payment happens within 90 days of completion of the project.
We recognize revenue at various points in time during the project period but payment process will begin only upon completion of the entire project.
Consequently, the time gap between revenue recognition and payment, depending on the project duration, may be more than a year.
In such a case, is it necessary to discount revenue for financing component?
Thanks