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dear tutor
with this senario, is the contract liability a defered revenue?
what is the ledger entries for revenue? the answer states, for any $1 should recognise $1.43. so when the contract liability recognised,we haveDr cash $1
Cr liability( defered revenue) $1when we recognised the revenue
Dr liability $1
Cr revenue $1.43
where the $0.43 goes?many thanks
Assume that I buy a gift card for $1.43
The company will credit deferred revenue with $1.43
I use the gift card to buy goods with a value of $1 and then throw the card away or forget to use the rest of the value.
The company knows from the past practice of its customers that they will not be back to spend the the $.43.
So the company will credit the entire $1.43 to revenue
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