Revenue Recognition

Introduction

Income as well as the utility, are a concept fluid, and base money as the realization could be a productive product net of an entity, income is defined as the monetary expression of the goods of an entity, the income should be defined as the monetary expression of created goods or services rendered, the definition says that revenues resulting from the sale of goods is unduly restricted. Revenues have also been defined as an increase in net assets, or an influx of assets resulting from the production or delivery of goods or performance of services. The expression "productive" includes what is often called "operational activities of the entity" the results of these activities (interest, dividends, prices of rentals) are included in the definition of income. Is defined as income excluding gains arising from the sale, exchange or conversion of assets other than goods in stock (inventory).

The recognition of revenue and expenses by reference to stage of the contract is called the percentage of completion method. This method allows you to compare the revenue derived from contract costs incurred in the same pursuit of progress that is, which will reveal the amount of revenue, expenses and results that can be attributed to the proportion of work completed. (Internal Revenue Service, 178)

According to the percentage of completion method, contract revenue is recognized as such in the income statement over the years in which to carry out the contract. Contract costs are recognized as an expense in running the work to which they relate. Any expected excess of contract costs on the total revenue derived therefrom shall be recognized as an expense immediately with outcomes. The contractor may have incurred costs that relate to future activity on the contract. These costs are recorded as an asset when it is probable that they will be recovered in the future. These costs represent amounts due from the customer and are often classified as a work in progress under the contract.

Discussion and Analysis

I think what really counts is only the gain on an assumption that is not considered that the gross amount or price of sale received the indicator of achievement of the entity, as are the other items included in income, according to the opinion of the commission of principles accounting are unusual items that should appear on your amount of income, net of taxes applicable to reach a net income and therefore are implicitly elements of income.

Measurement of income

In my opinion, the best way to measure the income of an entity is applying the value through exchange of goods or services that have occurred. In current practice, revenue is recorded, typically the price at which they reached in the agreement with the client , but this price measures the value of exchange and income involved, only when cash is received immediately, and even the latter case perhaps another setting is required for such bonuses and expected margins.

In actual practice, usually ignores the discount promises to pay future sums because:

It raises the question of what will be the ...