According to the revenue recognition principle, revenues should be recognized when they are earned, which happens when
Question:
a. A customer paid $ 10 cash for 10 song files from Apple’s iTunes store. Answer from Apple’s standpoint.
b. Home Depot provided a carpet installation for $ 2,000 cash. A comparable installation from other companies costs $ 3,000.
c. AT& T is scheduled to install digital cable at 1,000 Austin area homes next week. The installation charge is $ 100 per home. The terms require payment within 30 days of installation. Answer from AT& T’s standpoint.
d. AT& T completed the installations described in (c). Answer from AT& T’s standpoint.
e. AT& T received payment from customers for the installations described in (c). Answer from AT& T’s standpoint.
f. A customer purchased a ticket from American Airlines in September for $ 500 cash to travel in December. Answer from American Airlines’ standpoint.
Required:
For each of the transactions, if revenue is to be recognized in September, indicate the amount. If revenue is not to be recognized in September, explain why.
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Related Book For
Fundamentals Of Financial Accounting
ISBN: 9780073527109
3rd Edition
Authors: Fred Phillips, Robert Libby, Patricia A Libby
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