Chapter 17, Problem 22E

Each of the following is an independent situation that relates to the recognition of revenue:

1. a. Collection of a fare by an airline when the passenger makes a reservation
2. b. Receipt of payment for delivery services prior to the delivery of the goods
3. c. Sale of an annual pass to a theme park
4. d. Construction of a home in a subdivision prior to a buyer being identified
5. 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.