Question
In its 2021 annual report to shareholders, Ank-Morpork Times Inc. included the following disclosure: Revenue Recognition...
In its 2021 annual report to shareholders, Ank-Morpork Times Inc. included the following disclosure:
Revenue Recognition
- Advertising revenue is recognized when advertisements are published, are broadcast, or when placed on the Company's websites, net of provisions for estimated rebates, credit and rate adjustments and discounts.
- Circulation revenue includes single copy and home-delivery subscription revenue. Single copy revenue is recognized based on date of publication, net of provisions for related returns. Proceeds from home-delivery subscriptions and related costs, principally agency commissions, are deferred at the time of sale and are recognized in earnings on a pro rata basis over the terms of the subscriptions.
- Other revenue is recognized when the related service or product has been delivered.
Also, the following information on its current liabilities was included in its comparative balance sheets:
| CURRENT LIABILITIES | 2021 | 2020 | ||||
| Commercial paper outstanding | $ | 161,300,000 | $ | 294,251,000 | ||
| Accounts payable | $ | 173,950,000 | $ | 177,552,000 | ||
| Accrued payroll and other related liabilities | $ | 84,299,000 | $ | 129,983,000 | ||
| Accrued expenses | $ | 163,867,000 | $ | 193,748,000 | ||
| Accrued income taxes | $ | 228,220,000 | $ | 9,882,000 | ||
| Deferred subscription revenue | $ | 64,706,000 | $ | 84,385,000 | ||
| Current portion of long-term debt and lease obligations | $ | 2,564,000 | $ | 2,629,000 | ||
| Total current liabilities | $ | 878,906,000 | $ | 892,430,000 | ||
Required:
Assuming that Ank-Morpork Times Inc. collected $443,000,000 in cash for home-delivery subscriptions during fiscal year 2021, what amount of revenue did it recognize during 2021 from this source? Show the relevant T-account information to support your answer.
Assuming that Ank-Morpork Times Inc. collected $443,000,000 in cash for home-delivery subscriptions during fiscal year 2021, show the relevant T-account information to support your answer.
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Answers
Revenue Recognition of Ank - Morpork Times Inc. during 2021 Particulars Amount Cash Collection from Home Delivery Subscriptions Add: Decrease in Commercial Paper Outstanding Less: Decrease in Accounts Payable Less: Decrease in Accrued Payroll and other related liabilities Less: Decrease in Accrued Expenses Less: Current Portion of Long Term Debt and Lease Obligations Less: Decrease in Total Current Liabilites Add: Decrease in Deferred subscription Revenue 443,000,000 132,951,000 -3,602,000 -45,684,000 -29,881,000 -65,000 -13,524,000 19,679,000 502,874,000 $ Change in Income taxes is not considered for Revenue Recognition. Ank Morprok Times Inc will recognize $502,874,000 as reveue during 2021.
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