BUSI 1001 Lecture 5: BUSI 1001_ Chapter 5
8 Feb 2019
School
Department
Course
Professor
Document Summary
Chapter 5 - revenue recognition and accounts receivable. If any of the above aren"t met, then revenue shall only be recognized to the extent of the expenses recognized that are recoverable. New proposal - revenues from contracts with customers. (you don"t need to know about this takes effect in 2018) Uses a contract base instead of a transaction base. % completion = costs incurred to date / total estimated costs to complete. Revenues reported in a given year = total contract revenues * (% of completion at the end of year - % of completion at the beginning of the year) Profits recognized in a given year = revenues less costs incurred. Accounts receivable are reported on the balance sheet at their net realizable value - the net amount we expect to collect = Accounts receivable - less allowance for doubtful accounts (amount we estimate to not collect) E. g: 350,000 - 20,000 = net income of ,000 in accounts receivable.
