Each of the following is an independent situation that relates to the recognition of revenue:
- a. Collection of a fare by an airline when the passenger makes a reservation
- b. Receipt of payment for delivery services prior to the delivery of the goods
- c. Sale of an annual pass to a theme park
- d. Construction of a home in a subdivision prior to a buyer being identified
- e. Payment of insurance coverage at the beginning of the coverage period
Required:
For each situation, indicate if the company should recognize revenue over time or at a point in time. Also, indicate the company’s performance obligation and be as specific as possible as to the time period it is satisfied.
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