Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. what are the basic differences between the revenue

What are the basic differences between the revenue realizationprinciple and revenue from the contract...

60.1K

Verified Solution

Question

Accounting

What are the basic differences between the revenue realizationprinciple and revenue from the contract with customers (ASC 606)?Do you think ASC 606 is better than the realization principle? Why?Give your reasons.

Answer & Explanation Solved by verified expert
3.8 Ratings (506 Votes)
Revenue realisation principle is a generally accepted accounting principle GAAP that determines the specific conditions in which revenue is recognized or accounted for Generally revenue is recognized only when a critical event has occurred and the amount of revenue is measurable However there are several situations in which exceptions may apply The revenue recognition principle a combination of accrual accounting and the matching principle stipulates that revenues are recognized when realized and earned not necessarily when received Realizable means that goods andor services have been received but payment for the product or service is expected later Earned revenue accounts for goods andor services that have been provided or performed respectively In addition the revenue generating activity must be fully or primarily complete to include its revenue during the respective accounting period and there must be a reasonable level of certainty that earned revenue will be received Lastly according to the matching principle the revenue and its associated costs must be reported in the same accounting period On May 28 2014 the Financial Accounting Standards Board FASB and International Accounting Standards Board IASB jointly issued Accounting Standards Codification ASC 606 regarding revenue from contracts with customers ASC 606 provides a uniform framework for recognizing revenue from contracts with customers The old guidance was based on industryspecific guidance which created a system of fragmented    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

In: AccountingWhat are the basic differences between the revenue realizationprinciple and revenue from the contract with...What are the basic differences between the revenue realizationprinciple and revenue from the contract with customers (ASC 606)?Do you think ASC 606 is better than the realization principle? Why?Give your reasons.

Other questions asked by students

Q

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been...

Accounting
Q

A scientist wants to modify the DNA of a plant so that the plant expresses...

Biology
Q

x+y=kx-y=kThe solution to the system shown is(2, 2)(k, 0)(0. k)

Basic Math
Q

The square of a number is equal to 10 less than 7 times that number....

Basic Math
Q

Which of the following costs is not a cost added to the Work in Process...

Accounting
Q

At January 1,2024, M. E. Gainor Corporation had outstanding the following securities: ...

Accounting
Q

Patti Company owns 80% of the common stock of Shannon, Inc. In the current year,...

Accounting
Q

On January 1, 2021, Solo Inc. issued 1,200 of its 12%, $1,000 bonds at 97.8....

Accounting
Q

Maverick Co. budgets production of 200,000 units in the next year. Maverick's chief financial officer...

Accounting
Q

Exercise 14-9 On June 30, 2017, Sandhill Company issued $4,300,000 face value of 13%, 20-year...

Accounting
Q

Thomas's company is considering a project that has the following cash flow and WACC data....

Finance
Q

ASAP Required information (The following information apples to the questions displayed...

Accounting