Final answer:
Revenue in a bill-and-hold arrangement is recognized when control of the goods transfers to the customer, which may not necessarily align with the manufacturing, formation of the arrangement, physical delivery, or payment receipt.
Step-by-step explanation:
In a bill-and-hold arrangement, revenue recognition typically occurs when specific criteria set forth by accounting standards are met, not merely when the goods are manufactured, the arrangement is made, or when payment is received. According to the revenue recognition principle, revenue should be recognized when the earning process is complete and the control of goods or services has been transferred to the customer. In the context of a bill-and-hold situation, this usually means that revenue is recognized when the customer has taken control of the goods, even if the delivery has not yet occurred.Therefore, the correct answer is not explicitly listed here.
The revenue is usually recognized under the assumption that delivery has taken place and that the risk and rewards of ownership have been transferred to the buyer, even though the physical delivery may take place at a later date. Factors such as the customer's explicit acknowledgment of the arrangement, the goods being ready for physical transfer and they are being stored separately from the seller's inventory, and the seller not having the ability to use the goods or direct them to another customer are crucial in determining when revenue can be recognized.In a bill-and-hold arrangement, revenue is recognized when the delivery of goods is made. This means that the revenue is recognized at the point in time when the goods are physically transferred or made available to the customer, even if the customer does not take possession of the goods immediately.