In considering whether to recognise revenue when there are associated options:
A) The probability of the exercise of the options must be considered.
B) The probability of the exercise of the options must not be considered.
C) Put options will always give rise to revenue, whereas call options will not.
D) Call options will always give rise to revenue, whereas put options will not.

Question

Quizplus · Accepted Answer

The probability of the exercise of the options must be considered when recognising revenue. This is because if the options are likely to be exercised and the associated goods or services will be provided, revenue should be recognised. If the options are unlikely to be exercised, revenue should not be recognised. Therefore, choice A is the best answer.

In Considering Whether to Recognise Revenue When There Are Associated