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Question: Deferred Revenue at USA Today You've probably heard someone use the phrase "timing is everything." This phrase has a special meaning to the accountants at USA Today, a division of Gannett Co., Inc. USA Today collects fees for advertising before the advertisements appear. Customers pay subscriptions for paper delivery or online editions as much as a year in advance. Receiving these fees does not, however, mean that USA Today can record the amounts as current revenue. In accordance with generally accepted accounting principles, advertising fees are recorded as revenue when the advertising is printed or placed on a web site. In the same manner, subscription fees are recorded as revenue when purchased newspapers are delivered. When preparing financial statements, accountants at USA Today must analyze the money collected from advertising and subscriptions to determine what amount should be recorded as revenue.

Critical Thinking

1. Suppose you purchase a $150.00 annual subscription to USA Today on November 1. How much should USA Today recognize as revenue on its December financial statements?

2. Would your answer to question 1 differ if the customer selected online delivery of USA Today?

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