Chapter 1
Recognition and Measurement
28
AP-9B (
5
)
Yamasaki Customs Ltd., a public corporation with a September 30 year-end, has agreed to
re-build and restore a custom motorcycle for Jeff Bezus, a collector of rare vehicles. Yamasaki
quoted $20,000 for the job to be completed within one week (the average turnaround for
the industry). Jeff agreed and brought the motorcycle to Yamasaki’s shop on September
29 and paid $2,500 as a deposit. The work on the motorcycle started on October 1 and was
completed on October 3, 2016. Jeff paid the final invoice of $17,500 on October 3, 2016.
What amount, if any, of the total $20,000 in revenue should be recognized by Yamasaki on
the September 30, 2016 financial statements? Evaluate the situation against each of the four
revenue recognition criteria for sale of services.
