contractually binding agreement with multiple deliverables. Given that such agreements generate challenging revenue recognition concerns, the Financial Accounting Standards Board has established standards for Multiple Deliverable Arrangements in ASC 605-25. This codification section provides guidelines for transaction-specific revenue recognition and specific issues associated with activities that generate revenues.
The items covered by this topic as Multiple Deliverable Arrangements are products, services or permission for asset utilization agreed upon by the vendor and customer either orally or written. This applies to all industries in which a vendor will perform several activities that are geared towards revenue generation. Therefore, items covered by revenue recognition… Continue Reading...
treats this buyback guarantee as a lease in terms of revenue recognition, and furthermore amortizes the cost of the vehicle in the transaction. This creates a situation where instead of recording the car sold at full value (a sale), it is recorded gradually over 39 months. This despite the fact that no lease agreement exists, and that it creates a distortion in the revenue and costs. As a result, one has to look at the units sold and the cash flow statement in order to augment one's analysis of the income statement, owing to this quirk in the way that… Continue Reading...
How should the $25 Referral Credit be recorded in Runway's income statement?
In accordance to ASC 605-50-45 Revenue Recognition, a cash consideration handed to a consumer by a vendor or retailer is deemed a decrease in the selling prices of the products or services retailed. This would imply that these cash considerations would be deemed as an expense and a decline in the revenue to be generated by the vendor. Nonetheless, the cash consideration can be deemed as an expense if it solely meets two requirements. First, the cash consideration has to give rise to an identifiable benefit that is separable from the purchase of the recipient,… Continue Reading...
1. How should the $25 Referral Credit be recorded in Runway's income statement?
In accordance to ASC 605-50-45 Revenue Recognition, a cash consideration handed to a consumer by a vendor or retailer is deemed a decrease in the selling prices of the products or services retailed. This would imply that these cash considerations would be deemed as an expense and a decline in the revenue to be generated by the vendor. Nonetheless, the cash consideration can be deemed as an expense if it solely meets two requirements. First, the cash consideration has to give rise to an identifiable benefit that is separable from the purchase of the recipient,… Continue Reading...
of the major differences between GAAP and IFRS is with revenue recognition (IAS, 2018). Even with numbers that are seemingly consistent, such a top line revenue, the fact that they are compiled differently under the different systems makes it more challenging to compare companies like this.
The other issue is obvious from the times interest earned calculation. In the case of Apple, there isn\\'t one because Apple has a net gain from interest, because of its extensive financial holdings. But the way IFRS financial statements look, interest expense is not a line item. I wonder if \\"financial income\\" and \\"financial… Continue Reading...
