Reference no: EM132498890

AFT provides helicopter tours of the Grand Canyon. Clients pre-book tours on-line and pay the following fees at the time of booking:

1. a $10 administration fee for processing the booking and potential cancellations,

2. A $20 fee for guaranteeing the reservation and

3. $300 for the helicopter tour itself.

• Bookings can be placed as far as one year in advance. If the client cancels the booking more than 2 weeks in advance of the booked tour date, all fees except the administration fee is refundable. If the client cancels the booking within two weeks before the tour date, but before one week of the booked tour date, only the helicopter tour fee is refunded. If client cancels within one week or fails to show up for the scheduled tour, no fees are refunded.
• AFT has been in business for several years and can estimate the number of clients that will cancel or not show up for a booked tour. Cost of providing the helicopter tour can also be estimated.

Required:

Question 1: Discuss the performance obligations AFT has in relation to revenue recognition in the above scenario. When should AFT recognize each of the fees ($10, $20, and $300) as revenue?