BU547 Lecture Notes - Lecture 6: Capital Asset, Cash Register, Financial Statement
Document Summary
Revenue for student memberships, which grant free access to the pub from september to. August, is recorded in september (when the revenue is collected). The issue is that not all revenue may have been earned by year end (december 31). Aspe section 3400 revenue should be consulted to identify when revenue can be recognized. Performance for the full membership has not been achieved at year end. Based on the above analysis, gtp can recognize revenue for the four months that have passed; however, revenue for january to august will need to be reversed and set up as a deferred revenue liability. This will decrease revenue and net income by ,667 (2,500 . / 12 8), and will increase liabilities by the same amount. As the same error was made in the prior year, gtp will also see a decrease in opening retained earnings and an increase in revenue of ,333 (2,600 / 12 8).
