Question

Adam sells $100,000 of product to Bob, and also purchases $10,000 of cleaning services from Bob. The cleaning services have a fair value of $7,000. Adam should record revenue on its sale of product to Bob of:

Answer 1

Adam records revenue from the sale of products to Bob at the actual sale amount, which is $100,000, disregarding the cleaning services exchanged.

Step-by-step explanation:

Adam should record revenue on its sale of product to Bob at the actual amount of the sale, which is $100,000. The cost and fair value of the cleaning services that Adam purchased from Bob are not directly relevant to the revenue recorded from the sale of the product. Therefore, the revenue to be recorded is based solely on the transaction amount of the product sold.