(Solved Homework): Chapter 8 questions:…

Chapter 8 questions:

1. What are the two general revenue recognition criteria?

Don't use plagiarized sources. Get Your Custom Essay on
(Solved Homework): Chapter 8 questions:…
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!
Order Essay

2. What 4 revenue recognition factors are identified in FASB ASC Section 605-45-45, and how do these four factors relate to the two general revenue recognition criteria?

Answer the two questions above and submit your work in the assignment section. Due date: Sunday, 11:59pm.

Expert Answer


1. What are the two general revenue recognition criteria?

Generally there are a few revenue recognition criteria have been developed by SEC, where a publicly-held company must meet in order to recognize the revenue from a transaction.

  1. Collection possibility
  2. Delivery is complete.

2. What 4 revenue recognition factors are identified in FASB ASC Section 605-45-45, and how do these four factors relate to the two general revenue recognition criteria?

Below are the 4 factors identified in FASB ASC Section 605-45-45.

  1. Variable consideration—If the promised amount of consideration in a contract is variable, an entity would estimate the transaction price by using either the expected value (that is, probability-weighted amount) or the most likely amount, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled.
  2. The time value of money— An entity would adjust the promised amount of consideration to reflect the time value of money if the contract has a financing component that is significant to the contract. An entity would consider various factors in assessing whether a financing component is significant to a contract. As a practical expedient, an entity need not adjust the promised amount of consideration to reflect the time value of money if the entity expects at contract inception that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.
  3. Noncash consideration—If a customer promises consideration in a form other than cash, an entity would measure the noncash consideration (or promise of noncash consideration) at fair value. If an entity cannot reasonably estimate the fair value of the noncash consideration, it would measure the consideration indirectly by reference to the standalone selling price of the goods or services promised to the customer in exchange for the consideration.
  4. Consideration payable to the customer—If an entity pays, or expects to pay, consideration to a customer (or to other parties that purchase the entity’s goods or services from the customer) in the form of cash, credit, or other items that the customer can apply against amounts owed to the entity, the entity would account for the consideration payable to the customer as a reduction of the transaction price unless the payment is in exchange for a distinct good or service.

All these factors are closely related to the two general revenue recognition criteria developed by SEC to the companies. If it is not promising to make a reasonable estimate of the amount considered in the contract for doubtful accounts, then a sale cannot forward. The time value of money should be considered effectively as the SEC would not like bill and hold transactions, and only allows them under restricted circumstances. The substance of a noncash transaction should indicate that a sale untile the consignee sells the goods to a third party. The SEC explicitly points out that the transfer of goods solely for demonstration purpose is not actual sale, nor is a transfer when the seller is appreciative to take the goods back at ta specific price. The buyer no longer has the contractual right to individually lay off the contract and be paid back for any amounts already paid.

Homework Ocean
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

× Contact Live Agents