ch18 - 18-1Intermediate Accounting14th Edition18Revenue...

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Unformatted text preview: 18-1Intermediate Accounting14th Edition18Revenue RecognitionKieso, Weygandt, and Warfield18-21.Apply the revenue recognition principle.2.Describe accounting issues for revenue recognition at point of sale.3.Apply the percentage-of-completion method for long-term contracts.4.Apply the completed-contract method for long-term contracts.5.Identify the proper accounting for losses on long-term contracts.6.Describe the installment-sales method of accounting.7.Explain the cost-recovery method of accounting.Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives18-3The Current EnvironmentThe Current EnvironmentThe Current EnvironmentThe Current EnvironmentRestatementsfor improper revenue recognitionare relatively common and can lead to significant share price adjustments.Revenue recognitionis a top fraud riskand regardless of the accounting rules followed (IFRS or U.S. GAAP), the risk or errors and inaccuracies in revenue reporting is significant.18-4The revenue recognition principleprovides that companies should recognize revenueGuidelines for Revenue RecognitionThe Current EnvironmentThe Current EnvironmentThe Current EnvironmentThe Current EnvironmentLO 1 Apply the revenue recognition principle.(1)when it is realizedor realizableand (2)when it is earned.18-5Earlier recognition is appropriate if there is a high degree how high? of certainty about the amount of revenue earned.Delayedrecognition is appropriate if thedegree of uncertainty concerning the amount of revenue or costs is sufficiently high or sale does not represent substantial completion of the earnings process.Departures from the Sale BasisThe Current EnvironmentThe Current EnvironmentThe Current EnvironmentThe Current EnvironmentLO 1 Apply the revenue recognition principle.18-6The Current EnvironmentThe Current EnvironmentThe Current EnvironmentThe Current EnvironmentLO 1 Apply the revenue recognition principle.Illustration 18-2Revenue Recognition Alternatives18-7FASBs Concepts Statement No. 5, companies usually meet the two conditions for recognizing revenue by the time they deliver products or render services to customers.LO 2 Describe accounting issues for revenue recognition at point of sale.Implementation problems,Sales with DiscountsSales When Right of ReturnSales with BuybacksBill and Hold SalesPrincipal-Agent RelationshipsTrade Loading and Channel StuffingMultiple-Deliverable ArrangementsRevenue Recognition at Point of Sale (Delivery)Revenue Recognition at Point of Sale (Delivery)Revenue Recognition at Point of Sale (Delivery)Revenue Recognition at Point of Sale (Delivery)18-8LO 2 Describe accounting issues for revenue recognition at point of sale....
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This note was uploaded on 11/07/2011 for the course ACC 300 taught by Professor Lori during the Fall '10 term at Michigan State University.

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ch18 - 18-1Intermediate Accounting14th Edition18Revenue...

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