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hard · CFA Level I Financial Statement Analysis

Oakridge Capital reports under IFRS. It enters a contract to provide specialized equipment and three years of maintenance for a single price.

Under the Five-Step Model for revenue recognition, the maintenance component should most likely be treated as:

  1. Part of the equipment's transaction price recognized at delivery
  2. A liability until the entire three-year period expires
  3. A separate performance obligation satisfied over time

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