The Lyric Opera of Chicago is one of the largest and best-managed opera companies in the United States. Managing opera productions requires advance planning, including the development of scenery, costumes, and stage properties and the sale of tickets. To measure how well the company is operating in any given year, management must apply accrual accounting to these and other transactions. At year end, April 30, 2004, Lyric Opera’s balance sheet showed deferred production costs of $2,289,573 and deferred ticket revenue of

$18,984,555.9 Be prepared to discuss what accounting policies and adjusting entries are applicable to these accounts. Why are they important to Lyric Opera’s management?

Analysis of an Asset Account