BUS1 121A Lecture 5: Ch. 5-6
Document Summary
Recognize revenue when the goods/ services are transferred to the customer, for the amount we expect to receive. Recognition: identify the contract (doesn"t have to be written, identify the performance obligation of the contract, determine the transaction price, allocate the transaction price to each performance obligation, recognize revenue as each performance obligation is satisfied. Recognized when they are used to generate revenue. 2% discount if you pay w/in 10 days, otherwise full amount in. Contracts: work performed every year, payments made over contract period, point in time method, recognize profit @ the end, period of time method. Recognize revenue, expense, & profit throughout the entire year. Recognize revenue, expense, & profit over the entire contract, based on percent of completion. % complete x contract price - revenue(s) previously recognized. Cip inventory: loss on contract - contract (for next years) cip inventory, loss on contract - contract - recognized. Cash, a/p, etc (how they pay the cost)
