Question

When is revenue recognized in the following situations?

(a) Revenue from selling products,
(b) revenue from services performed,
(c) revenue from permitting others to use company assets, and
(d) revenue from disposing of assets other than products.

Answer 1

Revenue is recognized when the products or services are delivered and the control is transferred to the customer.

Step-by-step explanation:

In these situations, the recognition of revenue depends on when the products or services are delivered and the control of these products or services is transferred to the customer.

1. Revenue from selling products: Revenue is recognized when the products are delivered to the customer and the customer has legal title and control over the products.
2. Revenue from services performed: Revenue is recognized when the services are performed and the customer has received the benefits of the services.
3. Revenue from permitting others to use company assets: Revenue is recognized when the customer is allowed to use the company assets and has obtained control over them.
4. Revenue from disposing of assets other than products: Revenue is recognized when the assets are disposed of and the control of the assets is transferred to the buyer.