Week 4: Revenue Recognition

Question 1

4 SEC rules for revenue recognition*

Answer 1

Pervasive evidence of an arrangement

Delivery with transfer of risk and reward

Fixed and determinable price

Collectability reasonably assured

Question 2

General rule of revenue recognition

Answer 2

Recognize revenue when you provide a product or a service for the customer

Question 3

Wells Fargo fraud

Answer 3

Revenue recognition fraud. Violated the 1st step of the revenue recognition process

Question 4

One size fits all

Answer 4

One global standard for revenue recognition across all countries

Question 5

5-step process for revenue recognition

Answer 5

1. Identify the contract
2. Identify separate performance obligations
3. Determine transaction price
4. Allocating the transaction price to performance obligation
5. Recognizing revenue after all conditions are met

Question 6

When will the 5 revenue recognition rules be implemented?

Answer 6

2019-2021