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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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