Two accounting students were discussing the timing of revenue recognition for long-term construction contracts.The discussion focused on which method was most like the typical revenue recognition method of recognizingrevenue at the point of product delivery. Bill argued that recognizing revenue upon project completion was preferable because it was analogous to recognizing revenue at the point of delivery. John disagreed and supportedrecognizing revenue over time, stating that it was analogous to accruing revenue as a performance obligation wassatisfied. John also pointed out that an advantage of recognizing revenue over time is that it provides informationsooner to users.Required:Discuss the arguments made by both students. Which argument do you support? Why?
Two accounting students were discussing the timing of revenue recognition for long-term construction contracts.
The discussion focused on which method was most like the typical revenue recognition method of recognizing
revenue at the point of product delivery. Bill argued that recognizing revenue upon project completion was preferable because it was analogous to recognizing revenue at the point of delivery. John disagreed and supported
recognizing revenue over time, stating that it was analogous to accruing revenue as a performance obligation was
satisfied. John also pointed out that an advantage of recognizing revenue over time is that it provides information
sooner to users.
Required:
Discuss the arguments made by both students. Which argument do you support? Why?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
