Revenue Recognition Discuss transition methods of this new revenue standard, i.e., how an entity should apply this new standard for the first time. Which transition method do users/investors of financial statements likely prefer? Why? Which transition method do preparers of financial statements likely prefer? Why?
Revenue Recognition Discuss transition methods of this new revenue standard, i.e., how an entity should apply this new standard for the first time. Which transition method do users/investors of financial statements likely prefer? Why? Which transition method do preparers of financial statements likely prefer? Why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
100%
Revenue Recognition
Discuss transition methods of this new revenue standard, i.e., how an entity should apply this new standard for the first time. Which transition method do users/investors of financial statements likely prefer? Why?
Which transition method do preparers of financial statements likely prefer? Why?
Expert Solution
Step 1
This question deals with revenue recognition transition methods of the new revenue standard under FASB.
Step 2
The transition methods that are used in the new revenue standard are as follows:
- Full retrospective method
- Modified retrospective method
- Cumulative effective method
Step 3
The manner by which an entity will apply this new standard for the first time are as follows:
- Entity should identify the contract with the customer.
- Entity should identify the performance obligations within the contract.
- Entity should determine the overall transaction price of the contract.
- They should allocate the transaction price between the identified performance obligations.
- Entity should recognize revenue as performance obligations are satisfied.
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education