On January 1, SaLow Company enters into a contract to provide custom-made equipment to ByHi Corporation for $100,000. The contract terms allow cancellation without penalty by either party at any time prior to delivery of the goods. The contract specifies a delivery date of March 15 but the equipment was not delivered until April 10. The contract required full payment within 30 days after delivery. When should revenue be recognized for this contract?
A) Never, because it includes a termination agreement.
B) March 15
C) April 10
D) May 10

Question

Quizplus · Accepted Answer

Revenue should be recognized when the performance obligation is satisfied, which is when the equipment is delivered.

On January 1, SaLow Company Enters into a Contract to Provide