Revenue may be recognized:

Question

Quizplus · Accepted Answer

Revenue can be recognized if a company trades inventory at its usual selling price for newspaper advertising, as long as the fair value of the advertising received can be determined. This is known as a barter transaction.

Answer: D
 Revenue can be recognized in 2016 from the sale of subscriptions of a magazine to be published in 2017 if the revenue recognition criteria are met. Generally, revenue is recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable, and (4) collection is reasonably assured. If these requirements are met, revenue can be recognized even if the goods or services have not yet been provided.

A and C are not accurate examples of revenue recognition as they do not meet the revenue recognition criteria. The sale of a company's own common stock does not involve the delivery of goods or services and therefore does not satisfy the revenue recognition criteria. Similarly, an increase in the market value of land does not represent revenue as it does not involve the delivery of goods or services.

Revenue May Be Recognized