Starting Wednesday, September 8, 2010, travelers from 36 nations will be required to pay a new two-year entry or travel fee when they visit the United States — part of which will be used to promote tourism.
The travelers will pay $14 to register through the Electronic System for Travel Authorization (ESTA), required for those using the Visa Waiver Program. Four of the $14 will cover ESTA operating costs, and $10 will go toward promoting the United States as a tourist destination.
Â 1. According to the video and article, the legislation will create a corporation for Travel Promotion, which is a private corporation that will be funded in part by the $10 fee collected from visitors (who are not required to apply and pay for visas). Assume that the corporation begins its existence on September 8, 2010.Â How much revenue will it report as of December 31, 2010, if we assume that 500,000 visitors come to the U.S. over this period? (Hint: remember this fee covers a 2-year period.)
2.Assume that 200,000 visitors pay the fee on October1, 2010.Â What journal entry should be made on October 1?
3. Based on question 3, what adjusting journal entry should be made on December 31, 2010? (Hint: remember this fee covers a 2-year period.)
4.Â How should the corporation account for the $100 million of matching private sector funds?
Hunter, M. (2010) Visitors from 36 nations to pay U.S. tourism promotion fee, CNN Travel, September 8(Retrievable at http://www.cnn.com/2010/TRAVEL/09/08/promotion.fee/index.html?iref=allsearch)
Video (2010).U.S. Charges Entry Fee, September 8 (Retrievable at http://www.cnn.com/video/)