$875 is the amount of revenue that will be recognized.
Explanation:
Entire price for specialized bike will be appropriated in the ratio of individual prices of the non- specialized bikes and the maintenance contract.
The following calculation is made to calculate the revenue from the sale of a bike:
= 1400 multiply with (1000 divide by 1600)
After solving the above equation we get,
= $875 will be recognized by Neakanie at the date of sale.
Hence, the correct option will be with an amount of $875
Note: a maintenance contract is $600 and a comparable but non-specialized bike is $1,000 when added sums to $1600 amount.
