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karenlemus4774
karenlemus4774
10.04.2020 • 
Business

GoWeb IT Inc. is a public company that manufactures and sells IT systems and also provides IT training and support. GoWeb’s customers can purchase IT system hardware or support services separately, but the company also offers hardware and support services as a package. On June 14, 2020, Western Power Ltd., one of GoWeb’s customers, purchased an equipment and support package. The contract with Western is for $3,780,000 and includes hardware and three years of support services. The hardware that was purchased would normally sell for $2,737,800, and support services would be valued at $1,312,200 if purchased separately. The hardware cost GoWeb $2,450,000 and was delivered on June 30, 2020. GoWeb’s management expects that about half of the support services will be provided in July 2020 as the new hardware is installed. The balance of the support is expected to be provided evenly over the remainder of the contract. The contract also calls for Western to make a $900,000 payment to GoWeb within 30 days of signing the contract and then $960,000 on January 1, 2021, 2022, and 2023. Western is a successful company and GoWeb’s management has no concerns about collectibility.

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