Clarion Corp.invested cash in a 6-month certificate of deposit CD) on November 1, 2015.If Clarion Corp.has an accounting period that ends on December 31, 2015, when should Clarion recognize interest revenue from the CD?

Question

Quizplus · Accepted Answer

Interest revenue should be recognized over the period it is earned. Since the CD spans two accounting periods, Clarion should recognize interest revenue on December 31, 2015, for the interest earned up to that date, and again on May 1, 2016, for the remaining interest.