O'Connor Inc. provides apartments to local university students under different revenue packages. One popular package allows students to pay the annual rent in advance and take a 25% discount over the monthly rate. O'Connor should recognize the related revenue for students who choose this package
A) when the cash is collected at the beginning of the contract period.
B) at the end of the year after the contract period has ended.
C) evenly over the contract period.
D) when the contract is signed by the student.
E) for the amount received at the beginning of the contract period and a 25 percent additional revenue amount each month of the contract period.

Question

Quizplus · Accepted Answer

Revenue recognition over time is appropriate in this case because the service (providing an apartment) is performed evenly over the contract period. This aligns with the principle that revenue should be recognized as the related services are provided.