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How is the revenue for this agreement to be recognized

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Question - Revenue - Oso sells machines with or without service agreements. The price list indicates machines are sold for $15,000 with 3 years of service and for $12,000 without the service. It also indicates 3-year service agreements are sold separately for $6,000. Oso entered into an arrangement to sell the machine for $13,000 and 3-year service for $2,000 to Burro for total consideration of $15,000. Assuming all other revenue recognition criteria are met, how is the revenue for this agreement to be recognized?

a. $15,000 is recognized ratably over the three year service period

b. $10,000 will be recognized upon shipment of the machine and $5,000 will be recognized over the three year service period.

c. $15,000 is recognized upon shipment of the equipment

d. $13,000 will be recognized upon shipment of the machine and $2,000 will be recognized over the three year service period.

e. $12,000 will be recognized upon shipment of the machine and $3,000 will be recognized over the three year service period.

Reference no: EM133171386

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