Guidelines
Complexity of exactly when a sale occurs.
- When does revenue arise?
- Does a liability arise for revenues not yet earned?
Guidelines for revenue recognition.
- SFAC #4 underlies revenue recording (Chapter 2).
- REVENUE RECOGNITION PRINCIPLE
- Revenue recognized when: (“usually” occur together)
- Realized (realizable)--Item exchangeable for cash and
- Earned--Service performed, good given up