FAR 1.09 - IFRS Flashcards
FAR 1.09 - IFRS
Which of the following documents is typically issued as part of the due-process activities of the Financial Accounting Standards Board (FASB) for amending the FASB Accounting Standards Codication?
A proposed staff accounting bulletin.
A proposed accounting research bulletin.
A proposed accounting standards update.
A proposed statement of position.
A proposed accounting standards update.
EXPLANATION:
The Financial Accounting Standards Board (FASB), after a deliberative process that includes soliciting the views of a
stakeholders, issues an Accounting Standards Update describing amendments to the Accounting Standards Codification.
FAR 1.09 - IFRS
For $50 a month, Rawl Co. visits its customers’ premises and performs insect control services. If customers experience problems between regularly scheduled visits, Rawl makes service calls at no additional charge. Instead of paying monthly, customers may pay an annual fee of $540 in advance. For a customer who pays the annual fee in advance, Rawl should recognize the related revenue…
At the end of the fiscal year.
When the cash is collected.
At the end of the contract year after all of the services have been performed.
Evenly over the contract year as the services are performed.
Evenly over the contract year as the services are performed.
EXPLANATION:
Revenues should be recognized in the period in which the revenue has been realized and in which the earnings process
is substantially complete.
Since Rawl’s customers are paying for services in advance, realization has occurred at the beginning of the contract when the cash is collected.
The earnings process is completed by performing the services called for under the contract, indicating that the related revenues should be recognized evenly over the contract year as the services are performed.
