(Learning Objectives 1, 3: Linking deferrals and cash fl ows) Direct, the British wireless phone service provider,...
Question:
(Learning Objectives 1, 3: Linking deferrals and cash fl ows) Direct, the British wireless phone service provider, collects cash in advance from customers. All amounts are in millions of pounds sterling (£), the British monetary unit. Assume Direct collected £400 in advance during 20X6 and at year-end still owed customers phone service worth £105.
❙ Requirements 1. Show what Direct will report for 20X6 on its income statement balance sheet.
2. Use the same facts for Direct as in Requirement 1. Further, assume Direct reported unearned service revenue of £95 back at the end of 20X5. Show what Direct will report for 20X6 on the same fi nancial statements. Explain why your answer here differs from your answer to Requirement 1.
Step by Step Answer:
Financial Accounting International Financial Reporting Standards
ISBN: 9780273777809
1st Global Edition
Authors: Walter T Harrison, Charles Horngren, Bill Thomas, Themin Suwardy