Ch._5_Revenue_Recognition_Lecture - Revenue Recognition...

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Revenue Recognition Issues Chapter 5 Revenue Recognition General Rule Recognize revenue at point of sale ( w hen you deliver the product or perform the service) (SFAC) No. 5 : Recognize revenue when both: Earned : substantially completed what is required to be entitled to payment and Realized : reasonable certainty as to the collectibility of the asset to be received (usually cash). SEC Staff Accounting Bulletin No. 101 Issued in 1999 to curb premature recognition & because SFAC No. 5 was too vague Only recognize (record) revenue when: persuasive evidence of an arrangement exists; delivery has occurred or services rendered; seller’s price to buyer is fixed or determinable; collectibility is reasonably assured Special Revenue Considerations Significant Uncertainty Regarding Collection Installment Sales Method Cost Recovery Method Long Term Projects - more 1 year to complete Percentage of Completion Completed Contract Method Installment Method
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Ch._5_Revenue_Recognition_Lecture - Revenue Recognition...

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