The Issue of Revenue Recognition - Assignment Example

The issue that exists between Barbara Hardy and James Hogan is the issue of revenue recognition.

Hogan made a proposal that-
1. the revenue for membership be recognized when the fee for membership
2. the revenue from coupon books be recognized at the time of selling the books, and
3. The down payments that are made for the purchase of equipment, and expenses that are associated with guaranteeing the cross-country and rowing machines should be recognized when the payments are made.

The issues at hand can be solved by the use of the accounting principles that exist. The first principle that can be used is the matching principle. The principle states that any costs that are incurred in the generation of revenue that appears in a specified period in the income statement should also appear as an expense on the same income statement. The expenses and revenues should be matched (Furlan, 95). Read More