Question 4

Binz Company sells garbage bins and provides cleaning services to office clients. On June 1, Binz entered into a contract with a client that included delivery of 100 garbage bins and 5 years of cleaning services. The garbage bins were delivered to the client the same day. Which of the following is true?

Revenue for the garbage bins and the cleaning services must be recognized on June 1.

Revenue for the garbage bins is recognized on June 1, and revenue for the cleaning service is recognized over the 5 years as those services are performed.

Binz Company should not recognize any revenue until the end of year 5.

Revenue for the garbage bins is recognized on June 1, and no revenue will be recognized for the cleaning services until the end of year 5.