Question

Clarion corp. invested cash in a 6-month certificate of deposit (cd) on november 1, 2015. if clarion corp. has an accounting period that ends on december 31, 2015, when should clarion recognize interest revenue from the cd?

Answer 1

Clarion should expect to recognize interest revenue on their CD both on December 31st 2015 and May 1st 2016. They will receive it in December thanks to end of your returns and then it will pay out its full amount 6 months from the purchase date which is on May 1st of 2016.