When goods and services are bundled in a sales transaction
A)the service must be performed before any revenue is recognized.
B)collection must occur before any revenue is recognized
C)the amount of consideration received for the service must be recognized first.
D)each performance obligation under the contract must be measured separately.

Question

Quizplus · Accepted Answer

Each performance obligation under the contract must be measured separately according to the revenue recognition principle under the new revenue recognition standard. This means that when goods and services are bundled in a sales transaction, the revenue must be allocated to each performance obligation separately based on their standalone selling prices. This ensures that revenue is recognized only when the performance obligations are satisfied and the customer receives the goods or services they were promised.

When Goods and Services Are Bundled in a Sales Transaction