What Is the Appropriate Revenue Recognition Procedure for Upfront Payments

question 60

Multiple Choice

What is the appropriate revenue recognition procedure for upfront payments received in a contract with a customer?

• A) capitalize and amortize over the contract term
• B) defer recognition until the end of the contract
• C) recognize immediately
• D) recognize whenever the related performance obligation is satisfied

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Definitions:

Percent Equivalent

A way to express a number as a percentage of 100.

Rounded

Adjusted to the nearest whole number or specified decimal place to make calculations simpler or to reflect measurement limitations.

Decimal Equivalent

A numerical representation that expresses fractions in a decimal format.

Percent Equivalent

The numerical value of a fraction expressed as a percentage.