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If the selling price of goods includes an amount for after-sales servicing and support, then:

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

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Question added by Deleted user
Date Posted: 2013/08/28
Deleted user
by Deleted user

I believe it should be point4.

rabeeaha omer
by rabeeaha omer , معلمة احياء , وزارة التربيةوالتعليم

point3

By providing after sales services such as spare parts or maintenance  guaranteeing the product for several years

Adan Waqar
by Adan Waqar , Tax Specialist and Finance Analyst , Gulf Business Machines

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

Malik Muhammad Saeed
by Malik Muhammad Saeed , Manager Procurement & Imports , Karachi International Container Terminal Limited

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.

Prince Ninan
by Prince Ninan , Audit Executive , Lewis & Pecker

Revenue should be recognised over the period in which services are provided

Mohamed Ishaqe
by Mohamed Ishaqe , Warehouse Management Systems / Inventory Control & Document Controller , Salumco

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. 

Deleted user
by Deleted user

Option4

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