Hazy view Mall Ltd is a shopping center situated in Minot, Kwan-Zulu Natal. The company is in the process of preparing the financial statements for the year ended 31December 20X3.
Whilst preparing the annual rental reconciliation the accountant found that the bookkeeper had recognized all rentals received as income, including an amount of C65 000, received in December 20X3, from a long-standing tenant in respect of his January 20X 4 rentals.
Explain, with reference to the relevant definitions and recognition criteria provided in the
Framework, whether or not the treatment of the rental received for January 20X4 as ‘income’ in the financial statements of Hazy view Mall Ltd for the year ended 31 December 20X3 is correct. Where considered appropriate, the correct alternative treatment and correcting journal entry should be provided.