Performance earns the revenue
Revenue is not simply the invoice total or the cash received. For customer contracts under US GAAP ASC 606 and IFRS 15, the basic structure is to identify the contract, identify distinct performance obligations, determine the transaction price, allocate that price and recognize revenue when or as obligations are satisfied. The details include collectability, contract modifications and variable consideration.
A performance obligation is a promise to transfer a distinct good or service. Control transferring to the customer is central. Some obligations are satisfied at a point in time; others qualify for recognition over time. The customer paying early does not by itself accelerate performance.
Equipment plus support
An original example: a company sells a device and a year of separately distinct support for $1,100. Standalone selling prices are $1,000 for the device and $200 for support. Allocate the bundle in proportion to those prices: device 1,100 × 1,000 / 1,200 = $916.67; support $183.33. Recognize the device portion when control transfers, and the support portion as that service is delivered under the contract.
Calling the support “free” in a sales pitch does not make its performance obligation disappear. Conversely, not every promised activity is distinct. Installation that significantly integrates or customizes a product may belong to a combined obligation. Read the arrangement before applying a memorized timing rule.