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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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VolleyElite runs a volleyball program consisting of camps, tournaments, and specialized coaching. VolleyElite charges customers $500 per year for access to its facilities and programs. In addition, VolleyElite charges each customer a $100 registration fee. The fee is not refundable and must be paid at the initiation of the contract. Should the registration fee be considered a separate performance obligation from the yearly dues?

To determine

Explain whether the registration fee is considered to be a separate performance obligation from yearly dues.

Explanation

Distinct performance obligations:

Distinct performance obligations are distinct units of accounting, wherein revenue is recognized for the goods and services once each performance obligation is satisfied.

  • Company V must not treat the registration fee a “distinct performance obligation” since, it does not handover a good or service to a customer...

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