Class 3 Revenue Recognition - Revenue Recognition Overview...

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Revenue Recognition
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Overview Criteria for Revenue Recognition Multiple-Element Arrangements Long-Term Contracts Completed Contract Accounting Percentage of Completion Accounting Revenue Recognition after Point of Sale Installment Sale Method Cost Recovery Method Cash Method 2
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Revenue Recognition FASB criteria for recognition of revenues or gains: They are realized or realizable, and They have been earned through substantial completion of activities involved in the earnings process. Typically these criteria are met at the point of sale: Goods are delivered, or Services provided. 3
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Revenue Recognition In some cases, revenue can be recognized prior to the point of sale: Customer provides a valid promise to pay, and Conditions exist that contractually guarantee the subsequent sale In other cases, revenue can be recognized after the point of sale: Customer does not provide a valid promise to pay at time of delivery, or Significant effort remains on the contract.
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