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Basically, by the rule, you should not recognize revenue until it has been earned. So, when is, exactly, a revenue considered as earned? You may ask....
IAS recognizes the percentage-of-completion method as the only valid method of accounting for construction contracts. Under an earlier version of IAS 11, both the percentage-of-completion method...
The general principles followed by company management in recognizing revenue should be stated in a disclosure [footnote]. An entity should disclose: (1) The accounting policies adopted...
Following on my previous post “Premature or Fictitious Revenue Recognition [A Closer Look”, this post provide a checklist of items to consider in detecting premature or...
Premature revenue recognition and fictitious revenue recognition differ in the degree to which aggressive accounting actions are taken. In the case of premature revenue, revenue is...
Most revenue transactions—those initiated and completed almost at the same time—pose few problems for revenue recognition. However, not all transactions are that simple. For example, customers...
Services represent over half of the transactions completed in the U.S. economy, but there are no official pronouncements that provide specific accounting standards for them. Accounting...
Franchising has become a popular growth industry, with many businesses seeking to sell franchises as their primary income source and individuals seeking to buy franchises and...
In a broad sense, the term revenue refers to sources of income for a business enterprise. Most forms of business activity generate revenues from a range...
Back on the Christmas eve 2008, I received an interesting e-mail from Janet [a junior accountant in Canada]. She concerns about “revenue recognition of software sales...
In some industries it is common practice for customers to have the right to return a product to the seller for a credit or refund. However,...
This post covers a complete revenue recognition policies and procedures that you can actually apply into a business, a real business. This policies and procedures is...
Examples presented on the previous post [Applying Installment Method] ignored interest, a major component of most installment sales contracts. It is customary for the seller to...
In this post, I am going to reveal “how to apply revenue recognition under Installment method” in step-by step. As the title says, it is typically...
Following on my previous post (Evolving Problems In Revenue Recognition), the following controls can be used to spot transactional errors or attempts to alter the reported...
Certain problems currently found in the application of the general principles of revenue recognition, which can sometimes lead to fraudulent reporting, are discussed in this post....
In the construction industry, two accounting approaches have developed over the years regarding the recognition of revenue. The first approach—the completed-contract method—does not recognize any profit...
Company’s periodic income statement consists essentially of two components: revenue and expense. Revenue for the period is generally determined by applying the revenue recognition principle. According...