Canada Revenue Recognition for paid services not rendered


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Happy new year everyone,

We are a service company where customers pay in advance of receiving the services. While reviewing the accounts, I noticed that there about five payments received but not yet booked although several years have passed. Currently, we don't have an expiry policy. Can we recognize the revenue?
 
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kirby

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First research the facts thoroughly. If you delivered the services you can record the income. If you did not then you have a liability to the customer, not a revenue item for you to book. Also, some provinces have laws concerning unclaimed property, which applies here.
 
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I would review 2 points - statute of limitations and the likelihood that the customer will come back to utilize the advance payments - if it is very unlikely the customers are ever coming back for the money and statute of limitations have passed, I would consider it is reasonable to recognize the advance payments to income.
 

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