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For each of the following separate situations, determine how much revenue is recognized in December (using accrual basis accounting).

a. On December 7, Oklahoma City Thunder sold a $90 ticket to a basketball game to be played in March.
b. Tesla sold and delivered a $58,000 car on December 25. The customer will not pay until February.
c. Deloitte signs a contract on December 1 to provide 40 days of advisory services with receipt of $10,000 due at the end of the contract. On December 31, 75% of the services have been completed.

Respuesta :

anthougo

The accrual concept of recognizing revenue in the period that the transaction occurs and not when payment is received agrees with the matching principle.  Revenue should be recognized to match with the recognition of costs incurred for earning the revenue.

Situations                Amount of Revenue Recognized in December

a. Ticket Sales         $0

   Revenue

b. Sales                   $58,000

   Revenue

c. Contract             $7,500 ($10,000 x 75%)

   Revenue

Thus, for situation (a), no revenue is recognized in December since the game will be played in March.  For situation (b), the $58,000 is fully recognized in December, notwithstanding that the customer will pay in February.  For situation (c), only 75% of the revenue is recognized in December to agree with the percentage of completion.

Learn more about revenue recognition principle at https://brainly.com/question/24280609

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