Revenue Recognition
For each of the following transactions, events, or circumstances, indicate whether the recognition criteria for revenues and gains are met and provide support for your answer.
(a) An order of $25,000 for merchandise is received from a customer.
(b) The value of timberlands increases by $40,000 for the year due to normal growth.
(c) Accounting services are rendered to a client on account.
(d) A 1991 investment was made in land at a cost of $80,000. The land currently has a fair market value of $107,000.
(e) Cash of $5,600 is collected from the sale of a gift certificate that is redeemable in the next accounting period.
(f) Cash of $7,500 is collected from subscribers for subscription fees to a monthly magazine.
The subscription period is 2 years.
(g) You owe a creditor $1,500, payable in 30 days. The creditor has cash flow difficulties and has agreed to allow you to retire the debt in full with an immediate payment of $1,200.