Revenue recognition In October 2014, Blackbird Inc.signed a contract for $30,000 with the BH Law office to provide legal services for Blackbird Inc.for the remainder of 2014 and all of 2015.Assume that BH can reliably estimate future direct costs associated with the contract.The following services were performed based on the estimate by BH: Instructions Under the earnings approach,
a)When should BH recognize revenue in this situation? Explain.
b)Prepare journal entries to recognize revenues related to this contract on BH's books.

Question

Revenue recognition In October 2014, Blackbird Inc.signed a contract for $30,000 with the BH Law office to provide legal services for Blackbird Inc.for the remainder of 2014 and all of 2015.Assume that BH can reliably estimate future direct costs associated with the contract.The following services were performed based on the estimate by BH:  Instructions Under the earnings approach, 
a)When should BH recognize revenue in this situation? Explain.
b)Prepare journal entries to recognize revenues related to this contract on BH's books.

Quizplus · Accepted Answer

The Answer of Revenue recognition In October 2014, Blackbird Inc.signed a contract for $30,000 with the BH Law office to provide legal services for Blackbird Inc.for the remainder of 2014 and all of 2015.Assume that BH can reliably estimate future direct costs associated with the contract.The following services were performed based on the estimate by BH:  Instructions Under the earnings approach, 
a)When should BH recognize revenue in this situation? Explain.
b)Prepare journal entries to recognize revenues related to this contract on BH's books.

Revenue Recognition in October 2014, Blackbird Inc