Answered: The revenue recognition model is to…

The revenue recognition model is to provide a clear and uniform structure for all businesses to follow. Are you in agreement? Explain.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 10MC: Which of the following is the principle that a business must report any business activities that...

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The first step in the revenue recognition process is determining if a contract is in place between the seller and the customer. A contract is an agreement between two or more parties that creates enforceable rights and obligations. The standard states that a contract may be written, oral, or implied by customary business practices. To be a contract, the accounting standard states that it must meet five criteria. Required: Discuss the criteria necessary for a contract to be considered under the revenue recognition process. How would a company account for a contract that does not meet the criteria?
The revenue recognition model promises to provide a coherent and consistent revenue recognition framework for all companies to follow. Do you agree? Explain.
True or False & Why? : Comparability between businesses will be improved since ASC 606 establishes clear standards for when and how to recognize revenue by industry.
What are the five key steps a company follows to apply the core revenue recognition principle?
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.
When is revenue recognized by service provider? By a merchandiser? By a manufacturer? Give examples of internal control procedures a business enterprise must implement.
Identify the following questions as most likely to be asked by an internal (I) or an external (E) userof accounting information. Which firm reports the highest sales and income?
Give an example of situation to show how a business adheres to each of the following accounting principles: Historical cost Revenue recognition
The Question is: True or False & Why?: Comparability across companies will be enhanced since ASC 606 provides clear rules, by industry, for when and how to recognize revenue. Why the answer is "false"?
In accordance with IFRS 15, customer loyalty awards on the goods or services sold, the transaction price received or receivable by the entity must be allocated between the goods or services sold and the customer loyalty awards redeemable in the future partly as revenue and partly as a liability. must be recognized in full as a liability. must be recognized in full as revenue. must be recognized in full as an expense.
Each economic event or transaction will have a dual effect on financial position. Explain what is meant by this dual effect. and please describe how revenue recognition relates to transferring goods or services.
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