Question

Berry Corporation uses the proportional performance method of revenue recognition. Assume Berry runs a country club and incurs the following relevant costs regarding its membership contracts:
Initial direct costs ...................... $ 3,000
Annual indirect costs .................... 1,000
Estimated (and actual) total direct costs (for two-year period) .... 30,000
Direct cost per service act:
Area A .......................... 2.00
Area B .......................... 3.00
During Year 1 (of the two-year contract), members used Area A 2,400 times and Area B 1,200 times. Also, assume Berry collected $150,000 in receipts from the sale of memberships. Prepare a condensed income statement of Berry Corporation for Year 1.



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  • CreatedDecember 09, 2013
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