CFR, a firm of accountants has a contract with a client to provide assistance to the client’s internal audit department for a period of 3 years. The work is performed in complete coordination with client’s internal audit personnel and any issues identified during the course of audit are immediately brought to the knowledge of the client. Client’s internal audit plan is agreed in advance with CFR. Only a few internal audits are scheduled in the months of July and August as compared to other months, due to post year end work load at client’s other departments. CFR deputes staff on a need basis. Contract price is billed in six equal instalments through bills raised in arrears at the end of each half year on 30 June and 31 December. How and when should revenue should be recognized by CFR? Give reasons for your answer.

Answer rating: 100% (QA)

As per GAAP stipulates that revenues are recognized when realized and earned not necessarily wh... View the full answer