Business Level 3 Unit 10 Ch1
Ch18 Revenue Recognition (when it is realized or realizable, when it is earned)
Revenue Recognition at point of sale: (1) Sales with Discounts (2) Sales with Right of Return: Three alternative revenue recognition methods, and recognize revenue only if all of six condition (3) Sales with buybacks (4) Bill and Hold Sales: buyer is not yet ready to take delivery but does take title and accept billing. Revenue is reported at the time title passes if (a) the risks of ownership have passed; (b) the buyer makes a fixed commitment of purchase the goods, requests the transaction be on a buy and hold basis, and sets a fixed delivery date; and (c) goods must be segregated, complete, and ready for shipment. FOB shipping-buyer FOB destination-seller …show more content…
Ex. Treasury bills, commercial paper and money market funds. (2). Restricted Cash Ex. Petty cash, payroll and dividend funds. Amount is not material, not segregate from cash; amount is material, segregate. (3). Bank Overdrafts: when a company writes a check for more than the amount in its cash account.
2 A/R: (1). Trade receivable: A/R, Notes Receivable. (2). Nontrade receivable: Advances to officers and employees and subsidiaries; Deposits paid to cover potential damages or losses; dividends and interest receivable… (3). Recognition of A/R: (a) Trade discount. (b) Cash (sales) discounts.
Companies value and report short-term receivable at net realizable value—the net amount they expect to receive in cash. (Determining NRV need both uncollectible receivables and any returns or
Revenue Recognition at point of sale: (1) Sales with Discounts (2) Sales with Right of Return: Three alternative revenue recognition methods, and recognize revenue only if all of six condition (3) Sales with buybacks (4) Bill and Hold Sales: buyer is not yet ready to take delivery but does take title and accept billing. Revenue is reported at the time title passes if (a) the risks of ownership have passed; (b) the buyer makes a fixed commitment of purchase the goods, requests the transaction be on a buy and hold basis, and sets a fixed delivery date; and (c) goods must be segregated, complete, and ready for shipment. FOB shipping-buyer FOB destination-seller …show more content…
Ex. Treasury bills, commercial paper and money market funds. (2). Restricted Cash Ex. Petty cash, payroll and dividend funds. Amount is not material, not segregate from cash; amount is material, segregate. (3). Bank Overdrafts: when a company writes a check for more than the amount in its cash account.
2 A/R: (1). Trade receivable: A/R, Notes Receivable. (2). Nontrade receivable: Advances to officers and employees and subsidiaries; Deposits paid to cover potential damages or losses; dividends and interest receivable… (3). Recognition of A/R: (a) Trade discount. (b) Cash (sales) discounts.
Companies value and report short-term receivable at net realizable value—the net amount they expect to receive in cash. (Determining NRV need both uncollectible receivables and any returns or