Question

Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $65. Adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typically runs from December 1 through April 30. Ski West expects its season pass holders to use their passes equally throughout the season. The company's fiscal year ends on December 31. On November 6, 2021, Jake Lawson purchased a season pass for $355. Required: 1. When should Ski West recognize revenue from the sale of its season passes? 2. Prepare the appropriate journal entries that Ski West would record on November 6 and December 31. 3. What will be included in the Ski West 2021 income statement and balance sheet related to the sale of the season pass to Jake Lawson? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 When should Ski West recognize revenue from the sale of its season passes? When should Ski West recognize revenue from the sale of its season passes? < Required 1 Required 2 >

Answer 1

Answer -

PART-1)

When should Ski West recognize revenue from the sale of its season phase?

Solution: Equally throughout the season

Explanation: Ski West is required to recognize revenue at the end of each month over the season which is from December 1 through April 30. Ski West’s performance obligation need to be be performed over time as offering access to pass holders to ski

　

PART-2)

6-Nov- Dr. Cash $355

Cr. Deferred revenue $355

31-Dec- Dr. Deferred revenue $71

Cr. Service revenue $71

Calculation - 355/5 months =71

　

PART-3)

Amount $71 included in revenue

Amount $284 (355-71) remaining balance in deferred revenue

Explanation The revenue in Ski West’s income statement would rise by $71. The current liability in Ski West’s balance sheet in 2021 would rise by $284.

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