Questions: Identify when revenue should be recognized in each of the situations. a. Southwest Airlines sells you an advance-purchase airline ticket in September for your flight home in December. September b. Ultimate Electronics sells you a home theater on a "no money down and full payment in three months" promotional deal. In one year c. The Toronto Blue Jays sell season tickets online to games in the Skydome. Fans can purchase the tickets at any time, although the season doesn't officially begin until April. The major league baseball season runs from April through October. d. RBC Financial Group loans money on August 1. The loan and the interest are repayable in full in November. e. In August, a customer orders a sweater from the Target website, paying with a Target credit card. The sweater arrives in September. Target sends a bill in October and receives payment in October.

To determine when revenue should be recognized in each situation, we apply the revenue recognition principle, which states that revenue should be recognized when it is earned and realizable, regardless of when cash is received. Here is the analysis for each situation:

a. Southwest Airlines sells you an advance-purchase airline ticket in September for your flight home in December.

• Revenue should be recognized in December.
• Explanation: Revenue from the sale of airline tickets is recognized when the service (the flight) is provided, which is in December when the flight occurs.

b. Ultimate Electronics sells you a home theater on a "no money down and full payment in three months" promotional deal.

• Revenue should be recognized at the time of sale, assuming delivery occurs at that time.
• Explanation: Revenue is recognized when the product is delivered to the customer, as the earnings process is complete and the revenue is realizable, even if payment is deferred.

c. The Toronto Blue Jays sell season tickets online to games in the Skydome. Fans can purchase the tickets at any time, although the season doesn't officially begin until April. The major league baseball season runs from April through October.

• Revenue should be recognized over the period from April through October.
• Explanation: Revenue from season tickets is recognized as the games are played, as this is when the service is provided.

d. RBC Financial Group loans money on August 1. The loan and the interest are repayable in full in November.

• Revenue (interest income) should be recognized over the period from August to November.
• Explanation: Interest revenue is recognized as it is earned over the life of the loan, not when the payment is received.

e. In August, a customer orders a sweater from the Target website, paying with a Target credit card. The sweater arrives in September. Target sends a bill in October and receives payment in October.

• Revenue should be recognized in September.
• Explanation: Revenue is recognized when the goods are delivered to the customer, which is in September when the sweater arrives.