Revenue

Question 1

154. When should a company use the expected value method to determine transaction price?

Answer 1

• when there are more than two possible outcomes AND

- company has experience with contracts with similar characteristics

Question 2

155. For a good or service to be considered distinct and identified as a separate performance obligation, must be

Answer 2

-able to be used by the customer on its own or with resources readily available to the customer and able to be separately identified from other promises in the contract.

Question 3

156. In a contract situation, if a business collects a nonrefundable upfront fee on the day the contract is signed, how much revenue should they recognize?

Answer 3

Nonrefundable up-front fee should be recognized over the life of the contract.

Remember: should not recognize revenue until services have been provided.