The Rainbow House Painting Company has been contracted to paint a house for $3,600.One-half of that amount will be paid up front; the rest will be paid upon satisfactory completion.Rainbow should recognize the revenue when:

Question

Quizplus · Accepted Answer

The revenue should be recognized when the work is complete, as that is when the Rainbow House Painting Company has fulfilled their obligation under the contract. The first payment is simply a down payment and does not constitute completion of the work. Halfway completion and payment may indicate progress, but it does not signify completion of the work. Therefore, option D is the best choice.

The Rainbow House Painting Company Has Been Contracted to Paint