Multiple Choice
Neakanie Industries sells specialized mountain bikes.Each specialized bike purchased includes free maintenance service for 12 months.The price of the specialized bike is $1,000.When sold separately,a maintenance contract is $200 and a comparable but non-specialized bike is $600.Which of the following is correct?
A) Neakanie fulfills its performance obligation at the time of delivery of the bike.
B) Neakanie will recognize $1,000 of revenue at the end of 12 months.
C) Neakanie must allocate the purchase price based on the stand-alone selling prices of the bike and the service.
D) Neakanie will recognize $500 of revenue at the date of sale and the remaining $500 at the end of 12 months.
Correct Answer:
Verified
Correct Answer:
Verified
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