The accounting rules for service contracts give leeway to companies to estimate the profits they will produce in future years. Importantly, when a company adjusts those estimates of expected future income, it records the changes in the current accounting period. Thus, if a company can consistently find ways to ensure that a long-term contract will be more profitable in the future, the contract can be a source of income in the present. When the contracts are long, some even decades out, tiny tweaks to assumptions—the price of a part, the schedule of maintenance shutdown—can produce huge changes
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