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1. This amount should be recognized as revenue as soon as the seller has transferred the risks and rewards of ownership of the goods to the buyer,2. This amount should be deferred and not recognized as revenue until the servicing and support period has come to an end,3. This amount should be deferred and recognized as revenue over the period in which the servicing and support services are provided,4. The amount of revenue associated with servicing and support services is equal to the expected costs of providing these services
point3
By providing after sales services such as spare parts or maintenance guaranteeing the product for several years
According to IAS18
When the selling price of a product includes an identifiable amount for subsequent servicing that amount is deferred and recognised as revenue over the period during which the service is performed. The amount deferred is that which will cover the expected costs of the services, together with a reasonable profit on those services.
The Answer is C --This amount should be deferred and recognized as revenue over the period in which the servicing and support services are provided
We can say Point2,3,4 are reasonably correct. Once any service / technical / maintenance fee is agreed in any contract it will be recognized as revenue in which the services are provided to concerned party.
When the selling price of a product includes an identifiable amount for subsequent servicing that amount is deferred and recognised as revenue over the period during which the service is performed.
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