In the Chart Below, Identify the Revenue Recognition Method That

question 95

Essay

In the chart below, identify the revenue recognition method that you feel is most appropriate and also explain why.
$$\begin{array} { | l | c | l | } \hline \text { Transaction } & \begin{array} { c } \text { Revenue recognition } \\\text { method }\end{array} & \text { Why? } \\\hline \text { A. An appliance store sells and delivers a fridge } & & \\\text { with a two-year warranty. } & & \\\hline \text { B. An airplane manufacturer signs a contract to } & & \\\text { supply two planes over four years for Air } \\\text { Canada. } & & \\\hline \text { C. An insurance company issues a one-year } & & \\\text { insurance policy. } & & \\\hline\end{array}$$

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Definitions:

Time Expression

Phrases or terms used to indicate a specific period during which an event occurs or is scheduled to take place.

Maturity Dates

The specific dates on which a financial instrument such as a bond, loan, or fixed income instrument becomes due and is to be paid off.

95-Day Note

A financial instrument specifying repayment of a loan or debt within 95 days.

5-Month Note

A short-term financial instrument that matures or is due for payment in five months.