In November and December 2016 ABC Inc a newly organized maga

In November and December 2016, ABC, Inc., a newly organized magazine publisher, received $55,000 for 500 three-year subscriptions at $10 per year, starting with the January 2017 issue. ABC, Inc. included the entire $55,000 in its 2016 tax return. What amount should ABC, Inc. report in its 2016 income statement for subscriptions revenue?

Select one:

A. $0

B. $4,583

C. $18,333

D. $55,000

Solution

Since the subsricption revenue has been received in 2016 but it is for 3 years starting Jan\'17

Revenue amount belongs to future and hence accoring to matching principle should not be recorded in the income statement of 2016.

Hence, Amount to be recorded should be $0 i.e. A