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Assume you purchase a wide-screen television from Byrd Appliances for $3500 in order to watch...

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Accounting

Assume you purchase a wide-screen television from Byrd Appliances for $3500 in order to watch the upcoming Super Bowl. You pay cash for the television. Your purchase includes a service contract that will cover three years.

Why does Byrd recognize the revenue associated with service contract over its life even though the cash is received at the time of sale?

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