The following are independent situations that require professional judgment and critical thinking for determining the nature of the revenue, and when to recognize revenue from the transactions.

$1.$ Volkswagen sells all its vehicles with the promise that any service required in the first year of ownership will be free of charge.

$2.$ Lululemon sells you a new wardrobe online. The wardrobe is shipped and arrives in November, and you charge it to your Lululemon credit card. In December, you receive your Lululemon credit card statement and pay the amount due.

$3.$ Norwegian Cruise lines sell you a $10-$day Mediterranean cruise. The cost includes your transportation from you home city, room and board, and meals and entertainment on the ship. Shore excursions are not included.

Instructions:

For each scenario identify

$1.$ What is being "sold":goods, services, or a combination, and

$2.$ the timing of the revenue recognition.