Revenue Recognition and Up-Front non-refundable Membership fees

Given a promotional service provided by a retailer involving a
membership discount program, how should the up-front non-refundable
fee be accounted for? differed income based on amortized schedule? or
direct earnings due to the lack of a refund clause in the contractual
agreement?

any help on this question, or guidance on where to look for the answer
(i.e FASB statements, ARBs or other research areas) would be greatly
appreciated.

CPA 2 Be,

If the membership fee is a one-time payment, it is income upon receipt. If
it is an annual fee that will be renewed each year, it should be booked as a
liability such as "Unearned Membership Fees" and 1/12th of each member's
annual fee should be recognized each month. Don't fall into the trap of
simply taking 1/12th of the balance each month because it is a mathematical
error. You have to take 1/12th of the original annual fee for this to work.

Does this make sense?

Arnold
"CPA2BE" <> wrote in message
news:...
> Given a promotional service provided by a retailer involving a
> membership discount program, how should the up-front non-refundable
> fee be accounted for? differed income based on amortized schedule? or
> direct earnings due to the lack of a refund clause in the contractual
> agreement?
>
> any help on this question, or guidance on where to look for the answer
> (i.e FASB statements, ARBs or other research areas) would be greatly
> appreciated.
>
>