Rico is excited about the revenues that Orion generated during its first year of business. The main
Question:
Rico is excited about the revenues that Orion generated during its first year of business. The main revenue source is a matchmaking service for clients seeking a romantic relationship. New clients sign a contract and pay an up-front fee of $1,200, which is deferred and recorded evenly over 12 months. The fee is payable upon initial consultation, at which time Orion helps the client to make a personal profile and record a video for potential dates to view. Clients have regular contact with Orion staff to view videos of potential matches and discuss their progress over a 12-month period. At the end of the year, if clients have still not found a match, they can request a refund of 25% of their fee. If they find a match before the 12 months is up and leave the program, they do not receive a refund. However, they may return within the 12-month period if the relationship ends. Client sign-ups for the matchmaking service began in January of 2023 and have occurred evenly since, with 400 customers enrolled. So far, 150 of the customers have entered a long-term relationship and have happily left the program.
What would be the accounting issue related above scenario ?