B10 An entitys right to payment for performance completed to date need not be a

B10 an entitys right to payment for performance

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B10 An entity’s right to payment for performance completed to date need not be a present unconditional right to payment.
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It can be at an agreed-upon milestone or upon complete satisfaction of the performance obligation. An entity shall consider whether it would have an enforceable right to demand or retain payment for performance completed to date if the contract were to be terminated before completion for reasons other than the entity’s failure to perform as promised. B11 If a customer acts to terminate a contract without having the right to terminate the contract at that time (including when a customer fails to perform its obligations as promised), the contract (or other laws) might entitle the entity to continue to transfer to the customer the goods or services promised in the contract and require the customer to pay the consideration promised in exchange for those goods or services thus giving the entity the right to payment. B12 In assessing the existence and enforceability of a right to payment for performance completed to date, an entity shall consider the contractual terms as well as any legislation or legal precedent that could supplement or override those contractual terms. B13 The payment schedule might not necessarily provide evidence of the entity’s right to payment for performance completed to date. Methods for measuring progress towards complete satisfaction of a performance obligation B14 Methods that can be used to measure an entity’s progress towards complete satisfaction of a performance obligation satisfied over time in accordance with paragraphs 35–37 include the following: 1. output methods (see paragraphs B15–B17); and 2. input methods (see paragraphs B18–B19). METHODS FOR MEASURING PROGRESS TOWARDS COMPLETE SATISFACTION OF A PERFORMANCE OBLIGATION Output Methods
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Output methods recognize revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract. It include methods such as surveys of performance completed to date, appraisals of results achieved, milestones reached, time elapsed and units produced or units delivered. In applying the output method, the entity shall consider whether the output selected would faithfully depict the entity’s performance towards complete satisfaction of the performance obligation. It would not provide a faithful depiction of the entity’s performance if the output selected would fail to measure some of the goods or services for which control has transferred to the customer. If an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice.
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  • Summer '20
  • IFRIC, Exo Company, entity’s right

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