AFM 191 - 4.2 - Intro to revenue recognition

Question 1

What are the ASPE Revenue recognition criteria for goods?

Answer 1

1. seller has transferred the significant risks and rewards of ownership to the buyer
2. collection of payment is reasonably assured
3. the amount of consideration derived from the sale can be measured
4. the agreed upon delivery of goods or provision of services under the contractual arrangement has been performed

Question 2

what’s a mnemonic to remember the ASPE criteria to recognize revenue for goods?

Answer 2

RCMP
R - risks + rewards have been transferred
C - collection is reasonably assured
M - measurable consideration
P - performance under arrangement has been completed

Question 3

What’s the ASPE criteria to recognize revenue from services?

Answer 3

1. collection of payment is reasonably assured
2. the amount of consideration derived from the sale can be measured
3. the agreed upon delivery of goods or provision of services under the contractual arrangement has been performed - requires evidence of an arrangement existing between the seller and customer

Question 4

Why is the revenue recognition of services largely on a performance basis?

Answer 4

in order to meet all the criteria