CA2-5 (Revenue Recognition Principle) After the presentation of your report on the examination of the financial...

CA2-5 (Revenue Recognition Principle) After the presentation of your report on the examination of the financial statements to the board of directors of Piper Publishing Company, one of the new directors expresses surprise that the income statement assumes that an equal proportion of the revenue is recognized with the publication of every issue of the company’s magazine. She feels that the “crucial event” in the process of earning revenue in the magazine business is the cash sale of the subscription. She says that she does not understand why most of the revenue cannot be “recognized” in the period of the cash sale.

Instructions Discuss the propriety of timing the recognition of revenue in Piper Publishing Company’s accounts with:

(a) The cash sale of the magazine subscription.
(b) The publication of the magazine every month.
(c) Over time, as the magazines are published and delivered to customers.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

what is the revenue recognition principle and expense recognition principle? what is the accrual-basis accounting and...

what is the revenue recognition principle and expense recognition principle? what is the accrual-basis accounting and the cash-basis accounting? Adjusting entries- When and why should adjusting entries be prepared? What are the benefits of the adjusted-trial balance?

What would be the effect of removing either the Matching Principle or the Revenue Recognition Principle...

What would be the effect of removing either the Matching Principle or the Revenue Recognition Principle from the process? Use a concrete example of how doing so might affect accounting in a given period.Respond to your classmates’ postings by commenting on what might happen, if expenses are recognized over a period that is longer or shorter than that used for revenues.

Provide an example of transaction that follows five-step revenue recognition principle. Please identify each revenue recognition...

Provide an example of transaction that follows five-step revenue recognition principle. Please identify each revenue recognition steps.

What is a Core Revenue Recognition Principle on which revenue can be recognized by sellerWhat is...

What is a Core Revenue Recognition Principle on which revenue can be recognized by sellerWhat is a Core Revenue Recognition Principle on which revenue can be recognized by seller

Prepare your case analysis in an MS PowerPoint presentation. The new revenue recognition standard issued by...

Prepare your case analysis in an MS PowerPoint presentation. The new revenue recognition standard issued by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) will call for major changes in the way companies in the airline industry recognize revenue. Airlines may have to change how they account for loyalty status benefits, mileage credits, change fees, and breakage for tickets that expire unused. The American Institute of Certified Public Accountants (AICPA) has formed an airlines task force...

3) What is the Revenue Recognition Principle? Describe three cases that exemplify this principle. 4) Is...

3) What is the Revenue Recognition Principle? Describe three cases that exemplify this principle. 4) Is unearned revenue classified as an asset, liability or a revenue? Provide a reason for your choice. 5) Write the expanded accounting equation that you would use to study for the information in this chapter. 6) What are T-accounts and why are they used? 7) What is the purpose of an unadjusted trial balance? 8) What is the definition of net profit margin? Provide the...

Identify and write out the revenue recognition principle as explained in the chapter

Question: Refer to Apple’s financial statements in Appendix A to answer the following.1. Identify and write out the revenue recognition principle as explained in the chapter

Among the ten accounting principles (measurement principle, revenue recognition principle, matching principle, full disclosure principle, going...

Among the ten accounting principles (measurement principle, revenue recognition principle, matching principle, full disclosure principle, going concern assumption, monetary unit assumption, time period assumption, business entity assumption, materiality constraint, ans cost benefit constraint), which one of these ten do you believe is the most important and why. (answer in 12 sentences)

The revised revenue recognition accounting standard employs a five-step process to achieve the core principle to...

The revised revenue recognition accounting standard employs a five-step process to achieve the core principle to recognize income upon the transfer of promised goods or services. Use the Internet to research a company that bundles a product and a service. Examine income recognition of the bundled product and service for the company by addressing each step in the five-step process for revenue recognition. Give your opinion on the most critical step for accurately reporting revenue in the five-step process. Provide...

The financial accounting standards board (FASB) has new rules for recognition of revenue that went into...

The financial accounting standards board (FASB) has new rules for recognition of revenue that went into effect for the financial reporting periods beginning after December 15, 2017. Discuss and explain with examples the revenue recognition rules.

Subjects