The seller's price to the buyer is not fixed or determinable when:
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A. B. C. D.B
The correct answer is B: The transaction includes an option to exchange the product for others.
When the seller's price to the buyer is not fixed or determinable, it means that the price cannot be reliably determined at the time of sale. In such cases, the revenue recognition criteria under accounting standards are not met, and revenue recognition is deferred until the price becomes fixed or determinable.
Option B is the correct answer because an option to exchange the product for others introduces uncertainty into the transaction. If the buyer has the option to exchange the product, it is uncertain what product they will ultimately receive, and therefore, the price cannot be reliably determined at the time of sale.
Option A is incorrect because when the price is not contingent on some future event, it means that the price is fixed or determinable at the time of sale, and revenue recognition criteria are met.
Option C is also incorrect because a service or membership fee that is not subject to predictable cancellation during the contract period is typically recognized as revenue over the contract period, provided that revenue recognition criteria are met.
Option D is incorrect because payment terms, such as extended payment periods, do not necessarily affect the determination of whether the price is fixed or determinable. The key consideration is whether the price can be reliably determined at the time of sale.