Use the following information for questions. A product and service are bundled together and sold to customers for $350.The fair values of the product and service are $300 and $100 respectively.
-Cello Corp.has made a sale to a customer valued at $1,500,000.The associated expenses are $300,000.Some aspects of this sale have created an element of measurement uncertainty. Assuming that this element of uncertainty can be reasonably estimated at $450,000, Cello should
A)Increase revenues by $450,000.
B)Increase expenses by $450,000.
C)Decrease expenses by $450,000.
D)Increase expenses by $300,000.

Question

Quizplus · Accepted Answer

The correct answer is A because the element of measurement uncertainty should be recognized as an increase in revenues.

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