Financial Reporting and Analysis Q73

73Telecom Ltd. has a four year license to provide communication services to a corporation. The total amount of the license fee that Telecom Ltd. will receive is $50,000. Revenue is recognized on a prorated basis as it is a long term contract. What revenue would Telecom Ltd. recognize at the end of year 1?

Option : B
Explanation : The revenue recognized will be the total amount divided by the time period. Therefore, 50000/4 = $12,500.

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