Revenue is recognized
- When warned and expenses are recognized
- Not coincide with receipt or payment of cash
According to IASB, revenue is recognized from sales of goods when:
- Ownership is transferred completely: risk and rewards
- No continuing control over the goods sold
- Revenue can be reliably measured
- Cost can be reliably measured
- Probable flow of economic benefits
Revenue is recognized from service rendered when:
- Revenue can be reliably measured
- Cost incurred and cost of completion can be measured
- Probable flow of economic benefits
- Stage of completion can be measured
According to FASB, revenue is recognized when
- Realized or realizable
- Earned
- And 4 criteria to determine
- Evidence of an arrangement between the buyer and the seller
- Product delivered or service rendered
- Price is determined or determinable
- Selling can reasonably collecting money
Unearned revenue (14)
- Receive cash before revenue recognition complete
- Unearned revenue is money received from a customer for work that has not yet been performed.(rent payment)
- Reported on balance sheet as a liability
- Is reduced in the future as revenue is earned