Good Health Magazine (GHM) is a monthly publication devoted to healthful living. The magazine is published monthly and can be purchased at newsstands for $5 a copy. The publisher delivers the magazine to newsstands at the beginning of the month and will accept up to 20 percent of an order as returns. From experience, GHM can make fairly good estimates of returns.
Readers can also subscribe to the magazine for one, two, or three-year periods. With a subscription GHM mails the magazine to the subscriber each month, after payment in full for the subscription is received. The subscription price per copy is substantially lower than the newsstand price. GHM promises to refund any unused portion of the subscription. Historically, about 5 percent of customers ask for a refund.

Explain how GHM should recognize its revenue. Consider newsstand and subscription revenue separately. Be sure to use the revenue recognition criteria to support your answer.

  • CreatedFebruary 26, 2015
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