Revenue Recognition}

Beth Rader purchased North Shore Health Club in June 2018. Beth wanted to increase the size of the business by selling five-year memberships for \(\$ 2,000\), payable at the beginning of the membership period. The normal yearly membership fee is \(\$ 500\). Since few prospective members were expected to have \(\$ 2,000\), Beth arranged for a local bank to provide \(\$ 2,000\) installment loans to prospective members. By the end of 2018,250 customers had purchased the five-year memberships, using the loans provided by the bank.

Beth prepared her statement of earnings for 2018 and included \(\$ 500,000\) as revenue because the club had collected the entire amount in cash. Beth's accountant objected to the inclusion of the entire \(\$ 500,000\), arguing that the \(\$ 500,000\) should be recognized as revenue as the club provides services for these members during the membership period. Beth notes that the memberships have been sold and that collection of the selling price has occurred. Therefore, she argues, all \(\$ 500,000\) is revenue in 2018 .

\section*{Required:}

Write a short statement supporting either Beth or the accountant in this dispute.

\section*{Case