Revenue Recognition Guidance : Fasb Statement Of Financial Accounting Concepts ( Con ) 5, Recognition And Measurement

2223 Words9 Pages
Revenue Recognition Guidance FASB Statement of Financial Accounting Concepts (CON) 5, Recognition and Measurement in Financial Statements of Business Enterprises. As outlined in CON 5 and SEC Staff Accounting Bulletin (SAB) 104,Revenue Recognition, entities should apply the four general principles of revenue recognition, which are listed below, in determining when to recognize revenue from product sales: ● Persuasive evidence of an arrangement exists. ● Delivery has occurred or services have been rendered. ● The seller’s price to the buyer is fixed or determinable. ● Collectability is reasonably assured. ASC 605, Revenue Recognition, provides guidance for specific transaction revenue recognition and several matters related to activities which generate revenues. Some examples include the sale of products, services performed, and the gain or loss on conversions of nonmonetary assets to monetary assets. Revenue is recognized when it is realized or realizable and earned. In addition, the section provides information on (1) how the vendor will provide deliverables to the customer,(2) when to report revenue gross or net of certain amounts paid to others, (3) the accounting of credit given by a vendor to a customer, and (4) the use of the milestone method in arrangements that include research or development deliverables. Currently, GAAP has complex, detailed, and different revenue recognition requirements for specific transactions and industries. As a result, different

More about Revenue Recognition Guidance : Fasb Statement Of Financial Accounting Concepts ( Con ) 5, Recognition And Measurement

Get Access