Question

On November 1, 2021, Taylor signed a one-year contract to provide handyman services on an as-needed basis to King Associates, with the contract to start immediately. King agreed to pay Taylor $5,280 for the one-year period. Taylor is confident that King will pay that amount, but payment is not scheduled to occur until 2022. Taylor should recognize revenue in 2021 in the amount of _________.

Answer 1

Answer:

Taylor should recognize revenue in 2021 in the amount of $0.00

Explanation:

IFRS 15 Requires entity to recognise revenue WHEN the transfer of control of goods and services is made to the customer.

It is important to note that Control is transferred on an as-needed basis to King Associates

Tylor has not yet transfered any handyman services during 2021. Therefore no revenue is recognised as transfer of control of goods and services is made to the customer does not exist.

Only when handyman services are provided then the revenue is recognised in the year the servises are provided.

Answer 2

Answer:

$880

Explanation:

Accrual principle of accounting establishes that revenues and expenses must be recorded during the periods that they occur, not when they are collected or paid.

In this case, Taylor must recognize two months during 2021 (November and December) = ($5,280 / 12) x 2 = $880