Revenue Recognition

Question 1

In order to recognize revenue, the entity must be able to reasonably measure progress towards completion. Progress can be measured using…

Answer 1

Output Methods

Input Methods

Question 2

What are examples output methods?

Answer 2

Units produced or delivered, time elapsed, milestones achieved, surveys of performance completed to date, and appraisals of results achieved

Question 3

What are examples of input methods?

Answer 3

Costs incurred relative to total expected costs, resources consumed, labor-hours expended, and time elapsed.

Question 4

When are outputs methods used?

Answer 4

when the output selected represents the entity’s performance toward complete satisfaction of the performance obligation.

Question 5

How are revenue recognized with input methods?

Answer 5

Based on the entity’s efforts or inputs to the satisfaction of the performance obligation relative to the total expected inputs.

Question 6

Disadvantage of input methods?

Answer 6

not direct relationship between and entity’s inputs and the transfer of control of good and services to a customer

Question 7

How are revenue recognized when using output methods?

Answer 7

the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised