Long term IT contracts

Long term IT contracts

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Hi,
A company has entered into a long-term contract with an IT supplier for maintenance for 2 years at a rate of £100,000 per month. Total £2,400,000
How would it show on the monthly p&ls and the balance sheets?

Thanks

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By Accounting WEB
25th May 2001 17:03

Question slightly amended
Sorry, but I never made it clear in my question.
What is the intial DR & CR entries that I put on receiving the contract at the start.
I CR my Long term creditors but what if any is the matching entry on the DR side?

Thanks,

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By AnonymousUser
25th May 2001 12:23

100,000 per month chrage to the P & L
There should be a charge of £100,000 to the P & L every month. There will be a prepayment or an accrual in the BS depending on how the company is invoiced, whether it is in advance or arreas.

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