The customer signs and completes all paperwork for the sale

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Given the following scenario, on what date would you recognize revenue if preparing financials under U.S. GAAP? Would your answer change if you were using IFRS? Explain your answers in detail. Scenario: Corky Motors is in its first year of operations and, as of December 30, has total revenues of $5 million, projected net income of $400,000, and total assets of $40 million . On December 31, a customer and Corky Motors agree to terms on the purchase of a new automobile for $37,000.

The customer signs and completes all paperwork for the sale but asks Corky to hold the full-payment check until he can complete financing with a local bank. Because the bank has already closed for the day, it will be January 2 before the customer can release the check to Corky Motors. The customer already has a $40,000 line of credit approved by his bank, The Corky Motors' credit manager reviews the customer's file and offers to finance the transaction through the dealership's financing company. The customer, however, wishes to use a local bank and declines the financing offer. The customer and Corky agree to leave the automobile on the dealership lot overnight so it can be properly serviced .

Reference no: EM13483029

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