EthicsC1-9TheCodificationRevenueRecognition

EthicsC1-9TheCodificationRevenueRecognition - Ethics...

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Ethics C1-9, "The Codification: Revenue Recognition" A manager for a new company with which you are consulting states, “We will soon be making sales, and I was wondering when we should recognize the revenue from these sales?” Required: Search the Codification and provide an answer for the manager that summarizes the related GAAP. Include a Codification reference number for verification. Answer: You should only recognize the revenue once it has been earned. This would be when the item is sold or services rendered (Gibson, S.C 2008) . Future sales should not be recognized until the time that they are actually sold or received by the customer (Gibson, S.C 2008) . Also, the four key principles criteria for revenues are persuasive delivery, fixed and determinable sales and collectability. For all industries there should be persuasive proof of arrangement. There should be actual delivery to buyer or work done and certain fixed and determinable sales price must be recognized. Lastly, it should make sure about collectability (Gibson, S.C 2008) .
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  • Spring '16
  • Lawrence Baird
  • Balance Sheet, Generally Accepted Accounting Principles, Newell Company

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