Revenue RecognitionDiscuss transition methods of this new revenue standard, i.e., how an entity should apply this new standard for the first time.  Which transition method do users/investors of financial statements likely prefer? Why?Which transition method do preparers of financial statements likely prefer?  Why?

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Asked Mar 6, 2019
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Revenue Recognition

Discuss transition methods of this new revenue standard, i.e., how an entity should apply this new standard for the first time.  Which transition method do users/investors of financial statements likely prefer? Why?

Which transition method do preparers of financial statements likely prefer?  Why?

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Step 1

This question deals with revenue recognition transition methods of the new revenue standard under FASB.

Step 2

The transition methods that are used in the new revenue standard are as follows:

  • Full retrospective method
  • Modified retrospective method
  • Cumulative effective method
Step 3

The manner by which an entity will apply this new standard for the first time are as follows:

  1. Entity should identify the contract with the customer.
  2. Entity should identify the performance obligations within the contract.
  3. Entity should determine the ove...

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