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    Question

    A software company provides license + 2 years of updates

    and support. How should revenue be recognised?
    A Entire revenue at license delivery. Correct Answer Incorrect Answer
    B Allocate transaction price between license and support, recognise separately. Correct Answer Incorrect Answer
    C Recognise evenly over 2 years. Correct Answer Incorrect Answer
    D Capitalize as deferred revenue. Correct Answer Incorrect Answer
    E Recognise when cash received. Correct Answer Incorrect Answer

    Solution

    Revenue must be allocated to distinct performance obligations. License revenue at delivery; support revenue recognised over 2 years.

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