Answer the questions

Answer the questions

Introduction

Requirement No: 1

In May 2002 launched the IASB and the FASB in the context of the convergence efforts Revenue Recognition Project. This project aims to create single revenue recognition regulations and to eliminate inconsistencies and weaknesses of existing regulations. On 24 June 2010, the draft standard was Revenue from Contracts with Customers published. Here is the case of Revenue Recognition pattern in which it is to discuss about that how we can record revenue. There are many types by which you can recognize your revenue. The best way to measure the income of an entity is applying the value intermediate exchange of goods or services that have occurred (Booker & Jernigan, 1980). In current practice, the income is counted, typically the price at which it has arrived in the agreement with the customer, but this price measures the value of trade and income involved, only when cash is received immediately, and even the latter case may be needed by some other setting bonuses and expected margins.

Discussion

Bill and Holds

Bill and Hold is case in which until unless ownership is not transfer to buyer until you cannot record it your revenue. There are two types of bill and holds. One is that customer had purchased material and he wants you to keep those goods to your store until hi ware house get free in that case you can record your sales as revenue. Second case in which customer had bought goods from you but you had not delivered goods to hi his destination so what if he paid for goods in that case you cannot record your sales as revenue it's a kind of unrealized revenue (Shilling law, 1972).

Consignment

Consignment is a case in which you send your goods to your agent for selling to forward parties in that case you are not allowed to recognize it your revenue. For example you are seller and you business in Texas and your agent is in California you had sent goods to your agent for further selling in that case you cannot recognize it your revenue because still the ownership of goods is still related with you.

Sales with Buyback

Sales with buyback are contractual sales in which seller contract with buyer to buyback the equipment after the passage of time. For example you are selling a car with the condition to buyback it after 2 years. There is no restriction on how you use it after the two year when it life become end I will buyback it on the Market price. In such a case you can record your revenue when you sold your equipment.

Guarantees

The guarantees fixed priced separately and are sold by the entity would be treated as a performance obligation independent (separate) and revenue would be allocated to warranty service. Otherwise, the entity should account for the collateral as a guarantee obligation (cause the cost) unless the guarantee will provide the customer an additional service assurance that the item is delivered as specified in the ...