Live Wire Hot Rod Shop follows the revenue recognition principle. Live Wire services a car on July 31. The customer picks up the
vehicle on August 1 and mails the payment to Live Wire on August 5. Live Wire receives the check in the mail on August 6. When should Live Wire show that the revenue was recognized?
Revenue from a service or good rented or purchased must be issued and recognized exactly on the day the service and good were chosen and reserved by the customer, even if the customer will not use the service or good at that time. day and even if payment is made on another day. In this case, we can state that Live Wire must show that the revenue was recognized on July 31, because it was on that day that it made the car available for customer service.
The Live Wire show that the revenue was recognized on july 31
Explanation:
Here the Servicing of car as been done on July 31 , so revenue should be recognized on July 31 only, since the revenue is recognized at time of rendering service or selling goods.
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