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Explain when should revenue be recognized

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KC Plastics Inc., (KC) had the following three independent events occurred in 2018. The year-end is December 31st.

Event 1: On December 31, 2018, KC sold a machine for $125,000 and collected $25,000 as a down payment. The remainder was financed at 10% interest and is payable on December 31, 2019. KC will deliver to SF Loses Inc. on January 19th 2019 which title will be transferred.

Event  2: On June 15, 2018, the company received $30,000 from a client. The payment was deposit for services to be provided from July 1, 2018 to June 30, 2019. During 2018, additionally work was completed and invoiced by KC Plastics Inc.

Event  3: On October 15, 2018, KC sold concentrated colourant for $7,500. The colourant was delivered on that date. KC agreed that SB54 the purchaser to pay for the product with 3 totes of resin that sell for $2,000 a tote. SB54 promised to deliver the resin by February 28, 2019.

Give a brief report and explain each of the above noted events:

Question 1. When should revenue be recognized?

Question 2. The entry that should be made on the transaction date, if required.

Question 3. Explain the reasoning for your decisions.

Reference no: EM132462784

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