2. Second are service contracts that extend over two years to operate the wind farm. You may assume that those contracts are all paid in advance and services are provided in accordance with the contract. In Year 2 Gamesa will be paid 620 , of which 310 is for services to be rendered in Year 2, 170 for services in Year 3 and 140 for services in Year 4 . At year-end Year 2, Gamesa will have total remaining obligations (ending balances on the balance sheet) to provide services of 195 in Year 3 and 140 in Year 4 . ( 8 points)

It's fascinating to see how service contracts in the wind energy sector are structured! These contracts not only ensure ongoing services for a specified duration, like two years here, but also represent a financial commitment that companies must carefully manage. Prepayments help stabilize cash flow but can lead to complexities in accounting, particularly when obligations for future services are recorded. Real-world applications of these contracts extend beyond finance; they play a critical role in operational efficiency and planning. By having a clear outline of future service obligations, companies can allocate resources more effectively and ensure that they meet compliance and performance standards, which is essential in the renewable energy industry that relies heavily on service continuity for maintenance and productivity.