Question
Super Gym Inc. charges a $120 one-time nonrefundable membership fee for all those who join the gym, before the facilities can be used by a
Super Gym Inc. charges a $120 one-time nonrefundable membership fee for all those who join the gym, before the facilities can be used by a customer. For simplicity, assume all customers join the gym on January 1. On average, customers maintain their membership for 5 years. In addition, customers must pay a $20 monthly fee to continue using the facilities, at the beginning of each month. Choose the correct statement.
| a. the one-time fee is a performance obligation | ||
| b. the one-time fee is recognized as revenue upon receipt by Super because it is not refundable | ||
| c. $24 of revenue from the one-time fee is recognized each year per customer, for 5 years | ||
| d. Super will not report any deferred revenue in its balance sheet | ||
| e. the monthly fee is variable consideration |
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Managerial Accounting
Authors: Ronald W Hilton
7th Edition
0073022853, 978-0073022857
