How would the proceeds received from the advance sale of nonrefundable tickets for a theatrical performance be reported in the seller’s financial statements before the performance?

A. Revenue for the entire proceeds.
B. Revenue to the extent of related costs expended.
C. Unearned revenue to the extent of related costs expended.
D. Unearned revenue for the entire proceeds.
Answer D is correct

The question seems so simple. But I answered A. I thought since the tickets are nonrefundable we can recognize the revenue. I was wrong. Why can't we recognize the revenue since the tickets are nonrefundable?

Per SFAC 5 (Recognition and Measurement in Financial Statements), revenue should not be recognized until earned.

Revenues are generally earned when the product is delivered or services are rendered to customers.  When a sale or cash receipt (or both) takes place prior to the delivery of the product or performance of the service, as in this case, the revenues should be earned as delivery/performance takes place. 

Since the entire proceeds in this problem are for the advance sale of tickets, they should be reported as unearned revenue in the seller's financial statements before the performance.