THREE Jane Lazar : Question 18.2: Tutorial question: A) Explain briefly when revenue should be recognised for the following businesses: 1. A contractor building a bridge for the government 2. A soccer club that sells season tickets to premier league matches 3. A magazine publisher (sales are made through subscriptions and revenue of the company includes the advertising revenue). B) In the following situations, indicate whether it was proper for X Sdn Bhd to record the particular amount of revenue according to generally accepted accounting principles and FRS 118 Revenue. Your answer should be 'YES' or 'NO' and you required to give brief explanation to support your answer. (Assume that the company's year end is 31 December X 9 where appropriate). 1. In December X 9, a customer purchased a television set (including the sound system) from X Sdn Bhd for RM6,600 and paid cash. However since he was going to Australia, he asked X Sdn Bhd to deliver the television set in January X10. X Sdn Bhd immediately recorded the RM6,600 receipts as revenue. 2. X Sdn. Bhd. sold an antique car to Bakar for RM130,000 in December X 9. Bakar paid a deposit of RM30,000 and agreed to pay the balance by monthly instalments beginning in January X10. Bakar's credit rating is good. X Sdn Bhd recorded RM30,000 as revenue for the year ended 31 December X9. 3. X Sdn Bhd purchased RM10,000, 10% debentures at par on March X9. Interest is paid every 1 March and 1 September. X Sdn Bhd received RM500 cash interest on 1 September and recorded the RM500 as total interest revenue for the year needed 31 December X 9. 4. X SdnBhd received an order from a hotel to manufacture special fragrance soap for its customers in October X9. X Sdn . Bhd agreed with the terms and promised the hotel it will deliver the soap in February X10 according to the agreement. The hotel paid RM20,000 (20% of the contract price) when the contract was signed in November X9 and X Sdn. Bhd immediately recorded the RM20,000 as revenue