Revenue Recognition Membership Fees Midwest Health

Club offers o
Revenue Recognition—Membership Fees Midwest Health Club offers one-year
memberships.Membership fees are due in full at the beginning of the individual membership
period. As an incentive to new customers, MHC advertised that any customers not satisfied for
any reason could receive a refund of the remaining portion of unused membership fees. As a
result of this policy, Richard Nies, corporate controller, recognized revenue ratably over the life
of the membership. MHC is in the process of preparing its year-end financial statements. Rachel
Avery, MHC’s treasurer, is concerned about the company’s lackluster performance this year.
She reviews the financial statements Nies prepared and tells Nies to recognize membership
revenue when the fees are received. Answer the following questions.(a) What are the ethical
issues involved?(b) What should Nies do?View Solution:
Revenue Recognition Membership Fees Midwest Health Club offers o
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