DCSystem Services Provides Its Customers with Computer-Based Services Over an Extended

question 50

Essay

D.C.System Services provides its customers with computer-based services over an extended period.Customers are required to prepay the entire fee for the extended service.D.C.performs initial setup activities to enter a customer into its system.The initial setup allows the customer to receive automated services from D.C.from that point forward in the service agreement.
The management of D.C.plans to recognize the revenue over the life of the service contract,but plans to recognize a disproportionate amount of revenue at the beginning of the contract as a result of the completion of the setup activities and the cost incurred in connection with the completion of the setup activities.
Required:
Do you agree with the proposal by the management of D.C.regarding revenue recognition related to the setup activities? How should revenue be recognized for an agreement such as this?

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Definitions:

Sensory Stimuli

External or internal factors that are detected by sensory receptors, leading to specific physiological or psychological responses.

Social Influences

How the presence or actions of others affect an individual's behavior, thoughts, and feelings.

Barn Owl

A species of owl known for its distinctive heart-shaped face and primarily nocturnal habits, often found in rural areas and open woodlands across various parts of the world.

Location

Refers to a specific place or position, often used in the context of geographic places or specifying the site of events or activities.