Revenue recognition: Revenue recognition is an accounting principle that decides the process of determining and accounting for revenue. Revenue on any transaction is recognized on the performance of the obligation.
GAAP: GAAP (Generally Accepted Accounting Principles)is the standard guideline which is commonly used for financial reporting. These guidelines are maintained by the AICPA (American Institute of Certified Public Accountants).
(a)
To determine the amount of revenue that F should recognize on the date of sale of S to P F, Inc.
Given information: All the information related to F Company is provided in the question document.
(b)
To explain: To explain the accounting for S sales might be affected by the revenue constraint due to variable consideration or returns.
Given information: All the information related to F Company is provided in the question document.
(c)
To explain: To explain whether the revenue recognition should be constrained by collectability in the view of GAAP?
Given information: All the information related to F Company is provided in the question document.
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