Question: A new client, the Wolf Company, asks your advice concerning the point in time that the company should recognize revenue from the rental of its

A new client, the Wolf Company, asks your advice concerning the point in time that the company should recognize revenue from the rental of its office buildings. Renters usually pay rent on a quarterly basis at the beginning of the quarter. The owners contend that the critical event that motivates revenue recognition should be the date the cash is received from renters. After all, the money is in hand and is very seldom returned.

Required:
1. Describe the two criteria that must be satisfied before revenue can be recognized.
2. Do you agree or disagree with the position of the owners of Wolf Company? Support your answer.

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