The following independent situations require judgement to determine when revenue should be recognized.
Required:
Identify when the company providing the goods or services should recognize revenue. Use the revenue recognition criteria to support your answers.
a. The insurance policy on your car starts February 1, 2016, and covers one year. You paid the insurance company $1,800 on January 28, 2016.
b. Porter Airlines sold you a non-refundable one-way ticket in October 2016 for your fight home at Christmas. The cost of the ticket was $398.
c. You went for your annual dental checkup on April 5, 2016. The fees were $125 and the dentist’s office requires payment within 30 days of the visit. You paid the bill on April 30, 2016.
d. The Winnipeg Jets sell season tickets in one section of the arena for $6,087 per seat. The season begins in September, ends in March, and covers 41 games. You paid for the tickets in July 2016 for the 2016–17 season.
e. You bought a printer from Best Buy’s on-line site and paid with your credit card on June 14, 2016. The printer was delivered on June 18. You paid the credit card balance on July 15.
f. You bought furniture from Leon’s in December 2016 during a promotion. The selling price of the furniture was $1,100 and the first payment is due January 2, 2018.
g. On December 20, 2016, you borrowed $1,100 from TD Canada Trust. The loan plus interest of 5% is due in full on February 28, 2017.
h. You decide you need a new smart phone. You can purchase an iPhone from Rogers Communications. The current promotion indicates there is no cost for the phone if you sign up for a two-year phone and data plan at $65 per month.