Question

Which of the following is most likely to be considered revenue, according to the Financial Accounting Standards Board’s definition? Multiple Choice A company in the business of manufacturing scientific devices recognizes a gain from the sale of agricultural land from the fringes of its corporate campus. A pharmaceutical firm receives an anonymous donation to settle a liability owed to a municipality. A web streaming company fulfills a 12-month service term paid by customers in advance.

Answer 1

Answer:

A web streaming company fulfills a 12-month service term paid by customers in advance.

Explanation:

Revenue is recognized from services rendered or goods delivered. It is recognized only when the risk and reward is transferred, further it relates to the normal business of company.

As in the first sentence the company makes scientific devices and it sales an agricultural land, that is sale of fixed asset.

In second case the pharmaceutical company receives donation which is anonymous.

All the things are not revenue for company.

It is only the web streaming company which shall recognize revenue as the services are rendered and revenue shall be recognized related to normal business of company.