Terra, the British wireless phone service provider, collects cash in advance from customers. All amounts are in millions of pounds sterling (£), the British monetary unit. Assume Terra collected £380 in advance during 2012 and at year end still owed customers phone service worth £95.

Requirements
1. Show what Terra will report for 2012 on its income statement balance sheet.
2. Use the same facts for Terra as in Requirement 1. Further, assume Terra reported unearned service revenue of £75 back at the end of 2011. Show what Terra will report for 2012 on the same financial statements. Explain why your answer here differs from your answer to Requirement 1.