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Revenue Recognition (OTHER REVENUE RECOGNITION ISSUES (Bill and hold…

- - - - Agent's revenue is the amount of the commission it receives
      - Agent's performance obligation is to arrange for the principal to provide the goods or services to a customer
    - - Recognize revenue when the goods or services are sold to customer
      - Principal's performance obligation is to provide goods or perform services for a customer
  - - - Records commission revenue
      - As a dealer to consignor in selling the merchandise
    - - Recognize revenue after receiving notification of the sale and the cash remittance from the consignee
      - Record merchandise as inventory throughout the consignment
      - As a manufacturer or wholesaler who ships merchandise to the consignee
  - - - Additional service
      - Separate performance obligation
      - Companies should allocate a portion of the transaction price
    - - part of the product
  - - - a refund liability
      - the products expected to be returned
      - an asset for the right to recover the product
- - - - Allocation of the transaction price
      - determination of the timing of revenue
      - Judgments and changes that affect the determination of the transaction price
    - - The amount of amortization recognized
      - The method used for amortization
      - Closing balances of assets recognized to fulfill the contract
    - - Opening and closing balances in contract assets and liabilities
      - Disaggregation of revenue
      - Significant information related to the performance
  - - - Espensed as incurred
        
        not related directly to the contract
        
        not reflected in the price of the contract
      - Give rise to the an asset
        
        Would not incur if the contract not obtained
        
        Relate directly to the contract
        
        generate or enhance resources of the company (used in satisying performance obligation)
    - - Report the revenue gross (without consideration of credit risk)
      - Report an allowance for any impairment due to bad debt as an operating expense
      - Refers to customer's credit risk
        
        Is not a consideration in determining revenue recognition
    - - Contract Assets
        
        Conditional Rights
        
        Reported as Contract Assets
        
        Must satisfy another performance obligation
        
        Unconditional Rights
        
        Reported as Receivables
        
        Has satisfied its performance obligation with a customer
      - Contract liabilities
        
        Companies have received consideration from the customer
        
        Reported as Unearned Service/Sales Revenue
        
        Company's obligation to transfer goods or services to the customer
- - - - Measures revenue based on changes in assets and liabilities
      - Companies account for revenue based on the asset or liability arising from contracts with customers
    - - Five-Step Process
        
        Determine the transaction price
        
        The amount of consideration that a company expects to receive from a customer
        
        Allocate transaction price
        
        If more than one performance obligation exists, allocate the transaction price based on relative FV
        
        Identify the separate performance obligations in the contract
        
        Performance obligation is a promise in a contract to provide a product or service to a customer
        
        Exists if the customer can benefit from the good or service
        
        Identify the contract with customers
        
        A contract is an agreement that creates enforceable rights or obligations
        
        Recognize revenue when each performance obligation is satisfied
        
        When customer obtains control of the goods or services
      - Principle
        
        Recognize revenue when the performance obligation is satisfied
      - Key Objective
        
        in an amount that reflects the consideration that the company receives or expects to receive
        
        in exchange for the goods or services
        
        to depict the transfer of goods or services to customers