Joan Holtz

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  • Topic: Cost of goods sold, Franchise, Revenue
  • Pages : 4 (895 words )
  • Download(s) : 252
  • Published : September 8, 2012
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Joan Holtz
1. Electric Utility Bills

Revenue of the Electric Company can be measured given the amount of electricity generated for the year multiplied by the per-kilowatt/hour charge to customers. This is because the electric service has already been provided and distributed to customers for ready consumption

2. Retainer Fee

The amount of revenue to be counted in 2010 is $5,000 from the $10,000 retainer fee good for 1 year. This is because, despite the fact that there was no way of knowing how often, or when, the client would request advice, the fee is paying for the certainty of the law firm’s availability and expertise at any point where these are needed by the client. The delivery of this “service” lapses each month in proportion to the total amount of paid fees hence $5,000 should be recognized by the end of 2010.

3. Cruise

The amount of revenues that Raymond’s Travel Agency should record in 2010 is $260,000. The service that the travel agency provides is in the act of booking related travel services – accommodations, transportation, coordination in behalf of clients, etc – as opposed to delivering these same services per se. Since Raymond’s completed the above while still within 2010, revenues should already be recognized.

2011 refunds would not have an impact on revenue recognition as this should already represent a loss to Raymond’s, though certain stipulations in the company’s reservation policy should eliminate such possibilities or aid in mitigating adverse impacts to profits.

4. Accretion

The nursery owner should not recognize any revenue in 2010 as (1) under the delivery method, the Christmas Trees have not actually been purchased by customers and have not subsequently been delivered yet, and (2) under the production method, the trees have not yet been “harvested” to meet the condition of revenue recognition.

5. “Unbilled Receivables”

The reason why “Unbilled Receivables” are valued at rates at which...
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