A firm receives cash this period as payment for services to be rendered next period. The firm
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A firm receives cash this period as payment for services to be rendered next period. The firm records the amount of cash received as a deferred liability on its balance sheet, to be transferred to revenue next period in accordance with the matching principle of historical cost accounting. Explain why the reporting of a deferred liability like this is inconsistent with the measurement approach. Assuming that unrealized gains and losses are included in other comprehensive income, how would this transaction be recorded under the measurement approach?
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