(Assessing different ways of recognizing revenue, LO 1, 2, 6) Valhalla Furniture Emporium Ltd. (Valhalla) sells poor-quality furniture at low prices. Customers take delivery of their furniture after making a down payment of 10% of the selling price.

The customers agree to pay the balance owing in 36 equal monthly payments. Valhalla repossesses between 40% and 60% of the furniture sold because customers default on their payments. Repossessed furniture can be resold if it requires only minor repairs and cleaning. Some repossessed furniture is unsaleable and must be disposed of.

Required:

a. What are the possible points at which Valhalla could recognize revenue?

b. Explain what objectives of reporting each revenue-recognition point would satisfy?

c. Which revenue-recognition points can you support with the four GAAP criteria?