Unearned revenue defined as a liability
Lei. in accounting major, and Jim. a marketing major, are watching a Matlock rerun on late- night TV. Of course, there is a murder and the suspect wants to hire Matlock as the defense attorney. Matlock will take the case but requires an advance payment of $100,000. Jim remarks that Matlock has earned a cool $100,000 without lifting a finger. Lei tells Jim that Matlock has not earned anything but has a $100,000 liability. Jim asks "How can that be?"
Required
Assume you are Lei. Explain to Jim why Matlock has a liability and when Matlock would actually earn the $100,000.
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