Income measurment - INCOME MEASUREMENT I. Basic Revenue...

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INCOME MEASUREMENT I. Basic Revenue Recognition A. Revenue should be recognized in the period or periods that the revenue-generating activities of the company are performed. B. Realization Principle 1. The earnings process is complete or virtually complete and 2. There is reasonable certainty as to the collectibility of the asset to be received (usually cash). C.SEC Staff Accounting Bulletin No. 101-The SEC issued Staff Accounting Bulletin No. 101 to crackdown on earnings management. The bulletin provides additional guidance to determine if the realization principle is satisfied: 1. Persuasive evidence of an arrangement exists. 2. Delivery has occurred or services have been performed. 3. The seller’s price to the buyer is fixed or determinable. 4. Collectibility is reasonably assured. II. Significant Uncertainty of Collectibility A. Installment Sales Method-The installment sales method recognizes the gross profit by applying the gross profit percentage on the sale to the amount of cash actually
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Income measurment - INCOME MEASUREMENT I. Basic Revenue...

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