Question

Rothbart Manufacturing agrees to manufacture bumper cars for Banners Amusement Parks. Under the terms of the contract, Banners will pay Rothbart a total of $60,000, and Banners can cancel the contract if it so chooses but must pay Rothbart for work completed. Rothbart believes that, if Banners cancelled the contract, Rothbart could sell the bumper cars to another amusement park and still make a profit. The manufacturing contract is expected to last six months, and as of December 31, 2024, the job is 80% complete. How much revenue should Rothbart recognize in 2024 for this contract

Answer 1

Based on the information given, no revenue will be recognized.

How to illustrate the information?

It should be noted that the revenue is recognized when the title to the goods passes from the seller to the buyer.

Therefore, revenue is to be recognized only when control is transferred

This occurs when the entity has a present right to payment for the asset. This didn't occur based on the information given. Therefore, no revenue will be recognized.

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