Gym Fitness Limited (GFL), a small Canadian company traded on the Toronto Stock Exchange, operates a...
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Gym Fitness Limited (GFL), a small Canadian company traded on the Toronto Stock Exchange, operates a chain of upscale fitness clubs in Canada. GFL offers some of Canada's most luxurious, modern and high-tech fitness facilities. Members pay a non-refundable annual payment of $600/year which provides them access to gym as well as a comprehensive individualized fitness assessment. Other similar annual gym memberships sell for $580 but do not include a comprehensive individualized fitness assessment. Over the years, GFL has built an incredible reputation and a loyal following of customers. GFL has always delivered on their promise to provide luxurious, modern and high-tech fitness facilities. To attract new customers, non-members can purchase an individualized fitness assessment for $60 but cannot use the gym facilities. Required 1. Analyze the above and explain, with support, how the transactions or events should be recorded in the Company's December 31, 2019 financial statements. Be specific. Make any necessary assumptions. 2. Prepare the journal entry that would be recorded by GFL when it sells an annual membership? 3. Prepare the journal entry that would be recorded by GFL when it sells an individualized fitness assessment? 4. Explain whether any adjusting journal entry would be recorded for annual memberships? Be specific. 5. If GFL had an objective of increasing earnings-per-share (EPS), would it prefer to recognize revenue earlier or later? Gym Fitness Limited (GFL), a small Canadian company traded on the Toronto Stock Exchange, operates a chain of upscale fitness clubs in Canada. GFL offers some of Canada's most luxurious, modern and high-tech fitness facilities. Members pay a non-refundable annual payment of $600/year which provides them access to gym as well as a comprehensive individualized fitness assessment. Other similar annual gym memberships sell for $580 but do not include a comprehensive individualized fitness assessment. Over the years, GFL has built an incredible reputation and a loyal following of customers. GFL has always delivered on their promise to provide luxurious, modern and high-tech fitness facilities. To attract new customers, non-members can purchase an individualized fitness assessment for $60 but cannot use the gym facilities. Required 1. Analyze the above and explain, with support, how the transactions or events should be recorded in the Company's December 31, 2019 financial statements. Be specific. Make any necessary assumptions. 2. Prepare the journal entry that would be recorded by GFL when it sells an annual membership? 3. Prepare the journal entry that would be recorded by GFL when it sells an individualized fitness assessment? 4. Explain whether any adjusting journal entry would be recorded for annual memberships? Be specific. 5. If GFL had an objective of increasing earnings-per-share (EPS), would it prefer to recognize revenue earlier or later?
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The transactions or events should be recorded as follows in GFLs December 31 2019 financial statemen... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
Posted Date:
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