1. Revenue and Expenses. Dave Morris began a law practice several years ago, shortl

1. Revenue and Expenses. Dave Morris began a law practice several years ago, shortl

1. Revenue and Expenses. Dave Morris began a law practice several years ago, shortly after graduating from law school. During 19X1, he was approached by Delores
Silva, who had recently suffered a back injury in an automobile accident. Morris acA?ÂŹcepted Silva as a client, and in 19X2 proceeded with a lawsuit against Maddox
Motors. The suit alleged that Maddox had knowingly sold Silva an automobile with defective brakes. Late in 19X2, the courts awarded Silva $240,000 in damages.
Morris was entitled to 40% of this settlement for his fees. In 19X3, Maddox Motors paid Silva and Morris their respective shares of the judgment. Morris incurred
secretarial and photocopy charges in 19X2 of $12,000″ all related to the Silva case. Of this amount, $8,000 was paid in 19X2 and the balance was paid in 19X3.
Assuming that Morris uses the accrual basis of accounting, in what year(s) should the revenue and expense amounts be recognized? Why?

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