BUS 320 Lecture Notes - Lecture 23: Revenue Recognition, Measurement Uncertainty, Barter

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 320
• Professor: Mahmoudian Fereshteh

Document Summary

Revenues: sales that are part of normal earnings process e. g. sale of manufactured inventory. Gains: sales that are not part of the normal earnings process e. g. sale of capital assets used in production of inventory. The complexity is caused by the structure of the sales transactions. To properly account for the sales transactions, accountants must understand the business of the entity and the nature of the transaction. The key questions for understanding the sales transactions from a business perspective are: 1) what is being given sold? (item/service) and 2) what is being received? (monetary/non monetary), which are a part of the sales agreement: sales agreement. Sales transactions often involve transfer of goods, services, or both (known as deliverables). Sales of goods: physical assets with finite point when control transfers to buyer (generally with transfer of legal title and possession) Sales of services: legal title and possession is irrelevant.