A membership pass to Dukes Sports & Fitness (a private not-for-profit organization) includes unlimited rights to all facilities and a health magazine subscription. Non-members do not possess these rights. How must Dukes account for membership dues?

Question

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The membership pass to Dukes Sports & Fitness represents an exchange transaction because it provides the member with access to facilities and a subscription to a health magazine in exchange for payment of membership dues. As such, Dukes should recognize membership dues as revenue on a pro-rated basis that corresponds to the length of the membership. This approach recognizes revenue over the period during which Dukes is actually providing services to the member, which is consistent with the matching principle of accounting. Therefore, Choice D is the best option.

A Membership Pass to Dukes Sports & Fitness (A Private