Final answer:
The question involves recognizing revenue from contracts in a business setting, specifically for a company that sells and installs equipment. The installation does not alter the equipment, indicating it may be accounted for as a separate performance obligation under FASB's ASC 606 guidelines.
Step-by-step explanation:
The question relates to the accounting and business practices involved in recognizing revenue from contracts with customers, specifically in the context of a company that manufactures and installs equipment. When dealing with revenue recognition, companies must follow specific guidelines that dictate when and how revenue is recorded in the financial statements. The installation process, as mentioned, does not involve changes to the features of the equipment or require proprietary information for the installed equipment to function to its specifications. This detail is significant as it may suggest that the installation is a distinct performance obligation separate from the equipment. Following the criteria outlined in FASB's ASC 606, if the installation is considered a separate performance obligation, Sandhill Company would recognize revenue for the equipment and the installation services at different times based on when control of the goods or services transfers to Winkerbean Inc.