ACC301-ch08

ACC301-ch08 - 1 Revenue Revenue Recognition Recognition An...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Revenue Revenue Recognition Recognition An electronic presentation An electronic presentation by Douglas Cloud by Douglas Cloud Pepperdine University Pepperdine University chapter chapter 8 2 1. Identify the primary criteria for revenue recognition. 2. Apply the revenue recognition concepts underlying the examples used in SAB 101 . 3. Record journal entries for long-term construction-type contracts using percentage-of-completion and completed- contract methods. Learning Objectives Continued Continued 3 4. Record journal entries for long-term service contracts using the proportional performance method. 5. Explain when revenue is recognized after delivery of goods or services through installment sales, cost recovery, and cash methods. Learning Objectives 4 Revenue Recognition 1. They are realized or realizable. 2. They have been earned through substantial completion of the activities involved in the earnings process. FASBs two criteria for recognizing revenues and gains: 5 Both of these criteria generally are met at the point of sale. Revenue recognition most often occurs when goods are delivered or when services are rendered. Revenue Recognition 6 Revenue Recognition Criterion Associated With Criterion Associated With Revenue Recognition Revenue Recognition Criterion 1: The customer has provided payment or a valid promise of payment. Criterion 2: The company has provided a product or service. 7 Revenue Recognition Before the point of Sale EXCEPTION: Revenue can be recognized prior to the point of sale if : Customer provides a valid promise of payment AND Criterion 1 Criterion 2 conditions exist that contractually guarantee subsequent sale. 8 Revenue Recognition Point of Sale NORMALLY: Revenue is generally recognized at this point of time. Criterion 1 is typically satisfied at this point. Criterion 1 Criterion 2 Critical 2 is typically satisfied at this point. 9 Revenue Recognition After the Point of Sale EXCEPTION: The recognition of revenue must be deferred if : Customer does not provide a valid promise of time of receipt of product or service OR Criterion 1 Criterion 2 significant effort remains on the contract. 10 A product or service was provided without receiving a valid promise of payment from customer. The company has not provided the product or service. Revenue Recognition Generally, revenue is not recognized prior to the point of sale because either: An exception occurs when the customer provides An exception occurs when the customer provides a valid promise of payment and conditions exist a valid promise of payment and conditions exist that contractually guarantee the sale. that contractually guarantee the sale. 11 Revenue Recognition AICPA Statement of Position 97-2 gives companies more guidance through a checklist of four factors that amplify the two criteria: a. Persuasive evidence of an arrangement exists....
View Full Document

This note was uploaded on 06/11/2009 for the course ACC 301 taught by Professor Pendarvis during the Spring '09 term at St. Leo.

Page1 / 64

ACC301-ch08 - 1 Revenue Revenue Recognition Recognition An...

This preview shows document pages 1 - 12. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online