USA Recording future revenues

[Adam Wascholl]

I have a client who sells equipment and then provides a monthly subscription based service after it's installed. I have a case where the client has written up the invoice for the equipment in 2016, and payments have already been received, but the order isn't complete until June 2017 which is when the subscription will start.

How should I book the subscription, or do I not do that until the subscription starts?

 

[kirby]

The payments allocated to the subscription do not get earned until the subscription starts. So record that amount to the balance sheet as a liability as "deposit" AND make a note to yourself to start the earning process when June 2017 comes around. Also be sure to earn that deposit over the life of the subscription - not all at once.