How is exhibitor/sponsor revenue recognized?

• A. Entire amount paid upfront and recognized immediately.
• B. At least 50% paid upfront within 30 days of booking (recorded as deferred income), recognized when event occurs. Balance due 30 days after event.
• C. Revenue recognized evenly over the event period.
• D. No upfront payment; recognized on receipt.

Answer: (B)

Revenue from exhibitor and sponsor arrangements is earned when the event happens, because that’s when the service and exposure promised to the sponsor are delivered. Because money can be collected before the event, you don’t recognize it all right away. Instead, you take a deposit (at least 50%) within 30 days of booking and record it as deferred income (a liability) until the performance occurs. When the event takes place, you recognize the revenue for the contract, and any remaining amount becomes a receivable that is collected after the event. This approach matches revenue to the period in which the sponsor actually receives the benefit.

Recognizing the entire upfront amount immediately would overstate revenue before delivery. Recognizing revenue evenly over the event period isn’t appropriate for a one-time event when the main performance occurs at a specific time. Recognizing revenue only on receipt amounts to cash-basis accounting, not accrual accounting, and delays recognizing revenue beyond the event.