for each of the following separate situations, determine how much revenue is recognized in december (using…

for each of the following separate situations, determine how much revenue is recognized in december (using accrual basis accounting). a. on december 7, oklahoma city thunder sold a $104 ticket to a basketball game to be played in march. b. tesla sold and delivered a $72,000 car on december 25. the customer will not pay until february. c. deloitte signs a contract on december 1 to provide 40 days of advisory services with receipt of $24,000 due at the end of the contract. on december 31, 75% of the services have been completed. situations revenue recognized in december a sale of a ticket to a basketball game b sale of a car on credit c contract to provide advisory services

for each of the following separate situations, determine how much revenue is recognized in december (using accrual basis accounting). a. on december 7, oklahoma city thunder sold a $104 ticket to a basketball game to be played in march. b. tesla sold and delivered a $72,000 car on december 25. the customer will not pay until february. c. deloitte signs a contract on december 1 to provide 40 days of advisory services with receipt of $24,000 due at the end of the contract. on december 31, 75% of the services have been completed. situations revenue recognized in december a sale of a ticket to a basketball game b sale of a car on credit c contract to provide advisory services

Answer

Explanation:

Step1: Analyze ticket - sale situation

The basketball game is in March. Under accrual - basis accounting, revenue is recognized when the performance obligation is satisfied. Since the game has not been played in December, no revenue is recognized.

Step2: Analyze car - sale situation

The car was sold and delivered in December. Under accrual - basis accounting, when the goods are sold and delivered, the revenue recognition criteria are met. So, the full $72,000 is recognized in December.

Step3: Analyze advisory - service situation

The total contract amount is $24,000 and 75% of the services are completed by December 31. We calculate the revenue recognized as the percentage of services completed times the total contract amount. So, the revenue recognized is $24,000×0.75 = $18,000.

Answer:

a. $0 b. $72,000 c. $18,000