Module 21.1 &21.2: Income Statement Overview & Rev REc

Question 1

Can the income statement and OCI statement be presented separately in GAAP and IFRS?

Answer 1

Yes

Question 2

If payment for the foods is received prior to the transfer of the goods, what is the accounting entry?

Answer 2

a new liability, unearned revenue is created when the cash is received.

Question 3

What is the five step process for recognizing revenue for IFRS and GAAP?

Answer 3

1) Identify the contract with a customer
2) Identify the separate or distinct performance obligations in the contract
3) Determine the transaction price
4) allocate the transaction price to the performance obligations
5) Recognize revenue when the entity satisfies a performance obligation

Question 4

what is a performance obligation?

Answer 4

promise to deliver a distinct good or service. “distinct” means it meets one of the following criteria:

1) the customer can benefit from it
2) the promise to transfer the good or service can be identified separately from any other promises.

Question 5

What are the required disclosures under the converged standards for revenue recognition?

Answer 5

1) Contracts with customers by category
2) Assets and liabilities related to contracts, including balances and changes
3) outstanding performance obligations and the transaction prices allocated to them
4) management judgements used to determine the amount and timing of revenue recognition.