Revenue Recognition

Question 1

When might the risks and rewards be retained?

Answer 1

-a warranty
-a large part of the sale is the construction
-where the goods are in shipment
Etc

Question 2

What are the conditions for a reliable estimation?

Answer 2

1. Amount of revenue can be measured reliably
2. Probable economic benefit will flow to entity
3. Cost incurred to complete the transaction can be measured reliably

Question 3

Ow can revenue be recognised in construction contracts?

Answer 3

Entirely in year of completion or by percentage of completion.

Question 4

Hat is revenue?

Answer 4

Gross economic benefit inflow during the accounting period arising from ordinary activity