Revenue Recognition

Question 1

Gain/Loss on Long-term contracts

Answer 1

Profit over time as completed, at point in time when it is complete

Loss recognize immediately for both

Question 2

Steps for revenue recognition

Answer 2

Identify contracts
Identify separate obligations
Determine total consideration
Allocate total consideration
Recognize revenue when or as satisfied

Question 3

Measuring Revenue

Answer 3

Point in time vs over period of time

Over period of time
Consume as being delivered
Control while work is being done
Lack alternative use for the good

If none of these, point in time

Question 4

Long term contracts when revenue is recognized over time

Answer 4

((Total contract price - Total estimated costs) * (Costs to date / Total estimated costs)) - Profit previously recognized

Question 5

Recognizing revenue`

Answer 5

Upon the transfer to customer

Amount recognized represents what is expected to be received