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rsenn
Nov 28, 2007, 01:59 PM
How much should the prime contractor and the subcontractor recognize as revenue with the following facts?

Subcontractor sells to prime at $106.

Prime sells to US Government at $106 (no markup).

US Government pays prime $106.

Prime pays sub $100, and pursuant to their contract charges a $6 program management fee.

Should the subcontractor recognize revenue of $106 (and a $6 cost for the program management fee), or only $100?

Should the prime contractor recognize revenue of $112 ($106 plus the $6 program management fee) or something else?