MicroStrategy, Inc., is a software company that sells its services to other companies under multiyear contracts (on average for three years). The contracts call for a minimum fee, paid monthly, and additional fees when the services provided exceed certain levels. The chief operating officer (COO) of MicroStrategy is uncertain when the most appropriate time is to recognize the revenue from such contracts:

(a) at the time of contract signing;

(b) monthly, when billings are sent to customers; or 

(c) when the contract is complete and all services have been rendered. 

Discuss the criteria that should be considered in reaching this accounting policy decision. What would you recommend to MicroStrategy’s COO?