Liability recognition and measurement The following hypothetical cents relate to the Berlin Philharmonic. Indicate whether each transaction immediately gives rise to a liability under U.S. GAAP and, separately, IFRS. If the Berlin Philharmonic recognizes a liability, state the account title, the amount, and the classification of the liability on the balance sheet as either a current liability or a non-current liability. The Berlin Philharmonic reports it results in euros.
a. The Berlin Philharmonic receives €3,040,000 for season tickets sold for next season.
b. The Berlin Philharmonic places an order with a printing company totaling €185,000 for symphony performance programs for next season.
c. The Berlin Philharmonic receives the programs ordered in part b. along with an invoice for €185,000.
d. The Berlin Philharmonic receives notice from its attorneys that a loyal customer attending a concert last season and sitting in the first row of the symphony hail has sued the Berlin Philharmonic for €10 million claiming hearing loss. The customer normally sits further back but staff asked hr to move forward for this particular concert because of damage to the regular seat.
e. The Berlin Philharmonic signs a three-year contract with its first violinist at a salary of €140,000 per year.
f. The Berlin Philharmonic signs a five-year contract with Sir Simon Rattle, present conductor of the Philharmonic, to be the spokesman for the symphony at the end of his current contract, in 2012. Under the terms of the deal, the Berlin Philharmonic will pay compensation of €2 million a year to Sir Simon, beginning in 2012. Sir Simon will earn this compensation regardless of whether the Berlin Philharmonic asks him to perform any speaking engagements each year.