Smith sells computer software to Miller that requires significant construction.When recognizing revenue, Smith
A)allocates the associated discounts to all the customization efforts, including upgrades
B)can use percentage of completion to recognize revenue
C)can recognize revenue upon delivery of the software
D)must use the fair value of the software delivered in determining realizable revenue

Question

Quizplus · Accepted Answer

Since the software requires significant construction, it is likely that percentage of completion method will be the appropriate method to recognize revenue as it reflects the progress of the customization efforts. The other choices are less likely to be appropriate in this scenario.

Smith Sells Computer Software to Miller That Requires Significant Construction