Chapter 18 - Revenue recognition. After completing this chapter you should be able to: Apply the revenue recognition principle, describe accounting issues for revenue recognition at point of sale, apply the percentage-of-completion method for long-term contracts, apply the completed-contract method for long-term contracts. | Prepared by Coby Harmon University of California, Santa Barbara Intermediate Accounting Intermediate Accounting 14th Edition 18 Revenue Recognition Kieso, Weygandt, and Warfield Apply the revenue recognition principle. Describe accounting issues for revenue recognition at point of sale. Apply the percentage-of-completion method for long-term contracts. Apply the completed-contract method for long-term contracts. Identify the proper accounting for losses on long-term contracts. Describe the installment-sales method of accounting. Explain the cost-recovery method of accounting. Learning Objectives Current Environment Guidelines for revenue recognition Departures from sale basis Revenue Recognition at the Point of Sale Revenue Recognition before Delivery Revenue Recognition after Delivery Sales with discounts Sales with right of return Sales with buybacks Bill and hold sales Principal-agent relationships Trade loading and channel stuffing Multiple-deliverable arrangements Installment-sales method Cost-recovery method Deposit method Summary of bases Percentage-of-completion method Completed-contract method Long-term contract losses Disclosures Completion-of-production basis Revenue Recognition The Current Environment Restatements for improper revenue recognition are relatively common and can lead to significant share price adjustments. Revenue recognition is a top fraud risk and regardless of the accounting rules followed (IFRS or . GAAP), the risk or errors and inaccuracies in revenue reporting is significant. The revenue recognition principle provides that companies should recognize revenue Guidelines for Revenue Recognition The Current Environment LO 1 Apply the revenue recognition principle. when it is realized or realizable and when it is earned. Sale of product from inventory Type of Transaction Rendering a service Permitting use of an asset Sale of asset other than inventory Date of sale (date of delivery) Services performed and billable As time passes or . | Prepared by Coby Harmon University of California, Santa Barbara Intermediate Accounting Intermediate Accounting 14th Edition 18 Revenue Recognition Kieso, Weygandt, and Warfield Apply the revenue recognition principle. Describe accounting issues for revenue recognition at point of sale. Apply the percentage-of-completion method for long-term contracts. Apply the completed-contract method for long-term contracts. Identify the proper accounting for losses on long-term contracts. Describe the installment-sales method of accounting. Explain the cost-recovery method of accounting. Learning Objectives Current Environment Guidelines for revenue recognition Departures from sale basis Revenue Recognition at the Point of Sale Revenue Recognition before Delivery Revenue Recognition after Delivery Sales with discounts Sales with right of return Sales with buybacks Bill and hold sales Principal-agent relationships Trade loading and channel stuffing Multiple-deliverable arrangements .
