Revenue from Contracts with Customers

Question 1

Alternatives for estimating the standalone selling price

Answer 1

1) Estimation of the Price
in the Seller’s Market
2) Residual Approach
A residual is the total transaction price minus the observable prices for other items promised in the contract
Residual approach may be applied when
1) Standalone price is highly variable

Question 2

The incremental costs of obtaining a contract with a customer that are expected to be recovered must be

Answer 2

. Recognized as an asset and amortized in subsequent periods.
(capitalize)

Question 3

Refund liability,

Answer 3

Refund liability, is reported at the gross amount and reported separated from the revenue account.
It the amount refunded to the customer when the right to return is given

Question 4

The revenue recognition standard

Answer 4

Provide a single principles-based model. Can be applied to all contracts regarding of the industry.

Question 5

how to estimate variable consideration

Answer 5

1) expected value or
(2) most likely amount