ecognition criteria for revenues and gains are met and provide support for your answer. (a)    An order of $25,000 for merchandise is received from a customer. (b)    The value of timberlands increases by $40,000 for the year due to normal growth. (c)    Accounting services are rendered to a client on account. (d)    A 1991 investment was made in land at a cost of $80,000. The land currently has a fair market value of $107,000. (e)    Cash of $5,600 is collected from the sale of a gift certificate that is redeemable in the next accounting period. (f)    Cash of $7,500 is collected from subscribers for subscription fees to a monthly magazine. The subscription period is 2 years. (g)    You owe a creditor $1,500, payable in 30 days. The creditor has cash flow dif- faculties and has agreed to allow you to retire the debt in full with an immediate payment of $1,200.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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For  each  of  the  following  transactions,  events,  or  circumstances,  indicate  whether  the 

recognition criteria for revenues and gains are met and provide support for your answer.

(a)    An order of $25,000 for merchandise is received from a customer.

(b)    The value of timberlands increases by $40,000 for the year due to normal growth.

(c)    Accounting services are rendered to a client on account.

(d)    A 1991 investment was made in land at a cost of $80,000. The land currently

has a fair market value of $107,000.

(e)    Cash of $5,600 is collected from the sale of a gift certificate that is redeemable

in the next accounting period.

(f)    Cash of $7,500 is collected from subscribers for subscription fees to a monthly

magazine. The subscription period is 2 years.

(g)    You owe a creditor $1,500, payable in 30 days. The creditor has cash flow dif-

faculties and has agreed to allow you to retire the debt in full with an immediate

payment of $1,200.

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