Bellarine Ltd is publisher of Mode magazine and its customers usually sign a three-year subscription with an advance payment of $500.Mode magazine has 12 issues in a year.What is the appropriate accounting treatment for this sale on the date of signing that is in accordance with IASB (2011)Revenue?
A) Recognise revenue in full as this is an immaterial amount.
B) Recognise the sale as a provision.
C) Recognise the sale as unearned revenue.
D) Disclose the sale in the notes as a contingent item.

Question

Quizplus · Accepted Answer

According to IASB (2011) Revenue, revenue from the sale of subscriptions should be recognized as unearned revenue until the magazine is delivered, as the subscriber has not yet received the benefit of the subscription. Therefore, Bellarine Ltd should recognize the sale as unearned revenue until each issue of the magazine is delivered to the subscriber.

Bellarine Ltd Is Publisher of Mode Magazine and Its Customers