Multiple Element Arrangement GAAP

Question 1

Def

Answer 1

you are doing a lot of stuff for a lot of people; if i install a phone system, i develop software, hardware, ship, install, training post, etc. can’t really recognize the revenue till the last step is done.

MEA lets you allocate fair value of the contact to separate contract elements and revenue is recognized separately for each element

Question 2

Deferred credits

Answer 2

when cash is received or paid prior to it being earned, unearned or deferred revenue is recognized