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Question
On 1st November 2012, Barry Bean, a service manager received $60,000 of fees for a plant and equipment maintenance program to be completed for a clients factory equipment over the next three months.
Barry Bean's balance date is 31st December 2012. At balance date how much would be shown under each relevant element of the financial statements? Using concepts from the conceptual framework for financial reporting, explain the initial treatment of the fees received and their treatment over the next 3 months. For each part of this question you may assume that the services are being provided evenly over the three month period.
ii. The framework for preparation and presentation of financial statements gives definitions of assets, liabilities, equity, income and expenses. List the three parts of the accounting definition of income and give the reasons why some items that fit the definition are not recognised in the Income Statement.
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