Delect Co. provides repair services for the AZ195 TV set.
Customers prepay the fee on the standard one-year service contract.
The year 1 and year 2 contracts were identical, and the
number of contracts outstanding was substantially the same at
the end of each year. However, Delect’s December 31, year 2
deferred revenues’ balance on unperformed service contracts was
significantly less than the balance at December 31, year 1. Which
of the following situations might account for this reduction in the
deferred revenue balance?