Chapter 18 - Revenue Recognition

Question 1

Revenue Recognition: Step 1

Answer 1

Identify the contract with customers

Question 2

Revenue Recognition: Step 2

Answer 2

Identify separate performance obligations

Question 3

Revenue Recognition: Step 3

Answer 3

Determine the transaction price

Question 4

Revenue Recognition: Step 4

Answer 4

Allocate transaction price to separate performance obligations

Question 5

Revenue Recognition: Step 5

Answer 5

Recognize revenue when each performance obligation is satisfied

Question 6

Identifying Separate Performance Obligations: Objective

Answer 6

Determine whether the nature of a company’s promise is to transfer individual goods and services to the customer or to transfer a combined item for which individual goods and services are inputs.

Question 7

Determining the Contract Price: Variable Consideration

Answer 7

Price of good variable based on future events: price increases, volume discounts, credits, performance bonuses, or royalties

Question 8

Variable Consideration: Expected Value

Answer 8

Probability-weighted amount in a range of possible consideration amounts

Question 9

Variable Consideration: Most Likely Amount

Answer 9

The single most likely amount in a range of possible consideration outcomes