What is the appropriate revenue recognition procedure for upfront payments received in a contract with a customer?
A) capitalize and amortize over the contract term
B) defer recognition until the end of the contract
C) recognize immediately
D) recognize whenever the related performance obligation is satisfied

Question

Quizplus · Accepted Answer

Revenue should be recognized when the related performance obligation is satisfied, according to the principle of revenue recognition under both International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). This means that as the company delivers the promised goods or services to the customer, it recognizes the revenue associated with those goods or services, regardless of when the payment was received.

What Is the Appropriate Revenue Recognition Procedure for Upfront Payments