ACCT_101_CASE_ANSWER2010(final)

ACCT_101_CASE_ANSWER2010(final) - 1. Usually, the...

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1. Usually, the electricity usage is quite constant over time. Therefore, the company can estimate its revenues based on the data from the last year. If there is any inaccuracy, we can make adjustment in the following month. 2. Only half of the “retainer” should be recognized. This is because, according to the Revenue Recognition Principle, we recognize the revenue when the service is rendered. At the end of the year, only six months of the services have been provided. Even when the client would request advice in a particular month, we still recognize the revenue because our service has always been ready due to our responsibility. In other words, we have been provided the service throughout the year constantly. 3. According to the Revenue Recognition Principle, no revenue should be recognized in year 2006 because Raymond’s services started from January 23, 2007; revenue is recognized only when the company provides the service to its customers. The $260,000 is recognized as unearned revenue. If the customer cancel the
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ACCT_101_CASE_ANSWER2010(final) - 1. Usually, the...

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