Revenue Recognization Question. What is the significant difference between the Contract-Based Approach (IFRS) and Earnings Approach (ASPE)? Please provide an example for each for a better understanding.

Revenue Recognization Question. What is the significant difference between the Contract-Based Approach (IFRS) and Earnings Approach (ASPE)? Please provide an example for each for a better understanding.

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

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 1MC: A company should recognize revenue when a. the revenue is earned b. die contract is signed c. the...

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Revenue Recognization Question.

What is the significant difference between the Contract-Based Approach (IFRS) and Earnings Approach (ASPE)? Please provide an example for each for a better understanding.

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A company should recognize revenue when a. the revenue is earned b. die contract is signed c. the seller satisfies the performance obligation d. the consideration is received
One of the more difficult issues that companies face in recognizing revenue is determining the transaction price. In cases where the consideration in a contract includes a variable amount, an entity should estimate the amount of consideration to which it is entitled in exchange for transferring the promised goods or services. Required: Discuss the methods a company may use to estimate variable consideration and the situations in which one method may he preferred over another.
Why earnings management for contracting reasons is of interest to standard setters?
How is the contract-based approach (IFRS) and the earnings approach (ASPE) used for allocating the transaction price to various separate performance obligations? What are it's similarities/differences?
Which of the following should be avoided in a contract if cost certainty is important? Cost-of-living clauses Gainsharing clauses Profit sharing plans Piece-rate pay plans
Under PFRS 15, what is the measurement basis of revenue from contracts with customers? Select the correct letter: A. Revocable amount of the consideration received or receivable B. Book value of the consideration received or receivable C. Fair value of the consideration received or receivable D. Historical cost of the consideration received or receivable
Which of the following is not included in the FASB's 5-step model for evaluating when a company should recognize revenue? Identify the contract with a customer. Identify the performance obligations in the contract. Determine the transaction price. Recognize revenue when cash payment is received.
The third step in the process for revenue recognition is to (Enter 1, 2, 3, or 4 that represents the correct answer): determine the separate performance obligations in the contract. allocate transaction price to the separate performance obligations. determine the transaction price. determine the amount of revenue when each performance obligation is satisfied.
Topic: REVENUE FROM CONTRACTS WITH CUSTOMERS Requirements: a. Identify the performance obligations in the contracts. b. How should the entity recognize revenue from the contract? (State also the timing of revenue recognition for each identified performance obligation.)
Why does Recognizee revenue when (or as) each performance obligation is satisfied,” is important?
Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services. That core principle is implemented by (1) identifying a contract with a customer, (2) identifying the performance obligations in thecontract, (3) determining the transaction price of the contract, (4) allocating that price to the performanceobligations, and (5) recognizing revenue when (or as) each performance obligation is satisfied
Explain the importance of a contract in the revenue recognitionprocess.