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8.15 Income recognition for various types of businesses.

a. A bank lends money for home mortgages.
b. A travel agency ...
c. A major league baseball team ...
d. A producer of fine whiskey ...
e. A timber-growing firm contracts to sell ...
f. An airline provides transportation services to customers ...

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Solution Preview

(a) The revenue and expenses would both be recognized by a bank at the time that the sale takes place for the buyer. Once the papers are signed guaranteeing the loan, the bank has fulfilled the requirements for both income and expense recognition.

(b) The travel agency has more than one choice for revenue and expense recognition. The revenue and expenses can be recognized when the customer first makes the reservations, because the revenue recognition criteria are satisfied at that point. The agency could also recognize revenue and expenses when the customer actually pays for the ...

Solution Summary

The solution provides the correct revenue recognition procedure for each scenario listed in exercise 8.15 Income Recognition for Various Types of Businesses.

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