2. Retainer Fee – Depends on the agreement of the retainer fee. If it’s a down payment then revenue should be recognized when service is done. Working like pre-paid, the legal cost is deducted from the fee and accounted for the year. If it’s a one time payment where in the client has the privilege to call the lawyer anytime during the stipulated period then revenue should be considered in that period. In this case, the payment was made on July 2010 & the service provided only 6 months for year of 2010 (50% of the $10,000). The balance should be counted in the following year which is 2011.
3. Cruise – No revenue should be reported for 2012 because the delivery of services is not yet completed. Any cancellation of reservation would only deduct from 2011’s revenue not 2010.
4. Accretion – No sale or delivery of goods or services was done, thus no revenue should be recognized. The Christmas trees will only reflect as an asset of the owner not as revenue.
5. “Unbilled” receivables –Unbilled receivables are actually services rendered by the architectural firm and considered as revenues for the services. There is a difference in the process between the process of inventory and the process of rendering services because they are different in cost... [continues]
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