The following independent situations require professional judgement for determining when to recognize revenue from the transactions.
1. Air Yukon sells you an advance purchase airline ticket in September for your flight home at Christmas.
2. Better Buy Ltd. sells you a home theatre on a "no money down, no interest, and no payments for one year'' promotional deal.
3. The Centurions baseball team sells season tickets to games on-line. Fans can purchase the tickets at any time, although the season doesn't officially begin until April. It runs from April through October.
4. Designers End Ltd. sells you a sweater. In August, you placed the order using Designers' on-line catalogue. The sweater arrives in September and you charge it to your Designers End credit card. You receive and pay the credit card bill in October.
Instructions
(a) Explain when revenue is historically recognized under the current revenue recognition principle.
(b) Identify when revenue should be recognized in each of the situations under the current revenue recognition model.