Pikwitonei Gallery Inc. (PGI) is a new art gallery in Vancouver specializing in Inuit and First Nations art. PGI signs agreements with artists to have their works displayed in the gallery. The agreement requires the parties to keep each work on display for a minimum of four months, after which the gallery can return the work to the artist or the artist can request PGI return the work. The artist doesn’t receive any money from PGI unless a work is sold. If a work is sold PGI pays the artist the amount the work was sold for less a commission of 25 percent of the selling price. For example, PGI recently sold a work for $8,000, from which it paid the artist $6,000 and kept $2,000 as its commission.

Required:

When should Pikwitonei recognize its revenue and how much should it recognize?

Explain your answer.