Lecture8 - ACCT 3220 Revenue Recognition Impact Revenue Recognition Impact 1 ACCT 3220 Revenue Recognition Impact Revenue Recognition Impact 2 ACCT

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ACCT 3220/Sep 10, 2010 1 Revenue Recognition Impact Revenue Recognition Impact
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ACCT 3220/Sep 10, 2010 2 Revenue Recognition Impact Revenue Recognition Impact
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3 Ambiguous Revenue Recognition Scenarios: Sales Discount If it is likely that the customer will take advantage of the discount, then sales revenue should reflect the discounted amount Example 1: single customer, sales price $10; $1 discount if paid in 10 days Sales date (Jan 1): (Debit) Accounts Receivable $9 (Credit) Sales Revenue (net of discount) $9 If paid on Jan 10: (Debit) Cash $9 (Credit) Accounts Receivable $9 If paid on Jan 20: (Debit) Cash $10 (Credit) Accounts Receivable $9 (Credit) Gain on forfeited discount $1 Ambiguous Revenue Recognition Scenarios: Sales Discount If it is likely that the customer will take advantage of the discount, then sales revenue should reflect the discounted amount Example 2: 1000 customers, sales price $10; $1 discount if paid in 10 days, 80% take advantage of discount based on customer historical data Sales date (Jan 1): (Debit) Accounts Receivable [(800 x $9) + (200 x $10)] $1,800 (Credit) Sales Revenue (net of anticipated discount) $1,800
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This note was uploaded on 10/12/2010 for the course ACCT 3220 at Colorado.

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Lecture8 - ACCT 3220 Revenue Recognition Impact Revenue Recognition Impact 1 ACCT 3220 Revenue Recognition Impact Revenue Recognition Impact 2 ACCT

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