Revenue Recognition: Types, Disclosures, Modification, and Practical Case (Term Paper Sample)
THE project required the writer to:
1. provide a MEANINGFUL background of the revenue recognition
2. DESCRIBE the types, revenue RECOGNITION and disclosure and reporting issues
3. track the modification regarding the revenue recognition based on the accounting standards
4. provide a practical case for the revenue recognition from actual life
5. prepare appropriate conclusion and formal report
Term Project: Revenue Recognition (IAS 18, IFRS 15)
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Question 1: Background of the Revenue Recognition
Revenue recognition establishes a procedure an entity should follow when recognizing or reporting revenue in the books of accounts. Revenue is recognized when the performance obligation is met, and the transfer of goods to the customer (s) has taken place (Alotibi, 2018). Revenue should be recognized or reported in the books of accounts at the fair value of the amount receivable or received when the set conditions are met. Therefore, an entity should recognize revenue and other cash flows from customers using an accrual basis to depict the transfer of goods or services to the customers (Alotibi, 2018). It means revenue should be recognized when realized and earned and not mandatory when money is received.
Question 2: Types, Recognition, and Disclosures
Types of Revenue
Revenue is an inflow of economic benefit (s) to an entity arising from its business activities. According to Alotibi (2018), types of revenue include receipts from the sale of goods or services, cash equivalents, interests, royalties, dividends, or receivables arising from business activities.
Revenue Recognition
Generally, revenue should be recognized in the books of accounts when it is likely that future economic
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