ACCT 3520 Lecture Notes - Lecture 8: Remittance, Consignee, Consignor
Document Summary
Summary of the five step revenue recognition process. There are several situations where revenue recognition issues arise. This is based on i f r s 15 as a s p e has little specific guidance in these areas. The situations are: repurchase agreements, bill and hold, principal-agent relationships, consignments. Likely control stays with the company if it intends to repurchase: generally reported as a financing transaction (borrowing) using a contract liability account. Performance obligation in a principal-agent relationship: amounts collected on behalf of the principal are not revenue of the agent; revenue for the agent is the amount of commission it receives. The principal recognizes revenue when the goods and services are sold to a third party. The other party is primarily responsible for fulfilling the contract. The company does not have risks associated with the inventory. The company does not have the ability to set prices. The company does not have customer credit risk for the amount receivable.
