Under IFRS, revenue is allocated to individually identified performance obligations and then recognized when the performance obligation is satisfied. The process of allocating revenue and recognizing when the revenue is earned under US GAAP can be complex and, ensuring an organization is in compliance can require somewhat substantial analysis. The term is used in accrual accounting, in which revenue is recognized only when the payment has been received by a company AND the products or services have. These types of agreements are referred to as multi-elemental arrangements, where the multiple elements represent individual units of accounting. Unearned revenue, sometimes referred to as deferred revenue, is payment received by a company from a customer for products or services that will be delivered at some point in the future. Under US GAAP and SEC regulations contracts for services or products sold with multiple sub components are required to be broken up into individual units of accounting to which revenue is allocated based on their standalone value, or managements best guess as to value if the stand alone value does not exist. Specific accounting guidance exists for allocating revenue to the various sub components of the product or service sold. Additionally, revenue may be allocated differently for services including warranty or support services. This may be, for example, in the instance of a product sold the various multiple products included in the bundle of products. Revenue allocation is the act of allocating portions of the total revenue charged for a product or service to its various sub components. , respectively, were primarily recorded in the line item prepaid expenses and other assets in our consolidated balance sheets.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |