Question

Which of the following is not an indicator that revenue can be recognized over time?

1) The customer receives the benefits of the product or service over time
2) The seller has an enforceable right to payment for the product or service
3) The seller has transferred control of the product or service to the customer
4) The customer pays for the product or service upfront

Answer 1

The customer's upfront payment is not an indicator that revenue can be recognized over time; indicators include the customer receiving benefits over time, creation of an asset the customer controls, or an enforceable right to payment for work done to date.

Step-by-step explanation:

In the context of revenue recognition, the payment timing does not determine whether revenue can be recognized over time. According to revenue recognition principles, revenue is recognized over time if any of the following criteria are met:

Payment from the customer upfront, option 4, is not an indicator that revenue can be recognized over time. This is because revenue recognition is based on the transfer of control and the provision of benefits over time, not on when the payment is received.