An insurance company receives annual premiums for fire insurance on June 25 for coverage beginning July 1. Identify why the insurance company cannot recognize revenue when the premium is received.

A.

The customer has not taken possession of the asset.

B.

The insurance company earns the revenue over time, rather than at a point of time (time of sale).

C.

The customer does not control the asset.

D.

The insurance company has not transferred to the buyer the significant risks and rewards of ownership of the service.