Homework Help is Here – Start Your Trial Now!
Business
Accounting
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?

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?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity
Section: Chapter Questions
Problem 1RE
See similar textbooks
icon
Related questions
Topic Video
Question
100%

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?

Expert Solution
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 overall transaction price of the contract.
  4. They should allocate the transaction price between the identified performance obligations.
  5. Entity should recognize revenue as performance obligations are satisfied.
steps

Step by step

Solved in 5 steps

Blurred answer
Knowledge Booster
Accounting Equation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
SEE MORE TEXTBOOKS