Question

Kerianne paints landscapes, and in late 2018 placed four paintings with a retail price of $160 each in the Holmstrom Gallery. Kerianne’s arrangement with Holmstrom is that Holmstrom will earn a 10% commission on paintings sold to gallery patrons. As of December 31, 2018, one painting had been sold by Holmstrom to gallery patrons.

Answer 1

Revenue recognition states that revenue should not be recorded until it is earned. However, not all sales are made in cash. The speed with which credit sales become cash is also a critical component of revenue recognition.
As at the 31st December the sale is made is worth $160.
Therefore, the revenue with respect to these four paintings that Kerianne should recognise in 2018 is $160.