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26 Cards in this Set

  • Front
  • Back
comprehensive income definition
change in equity of a business enterprise
during an accounting period
from transactions and other events and circumstances from nonowner sources
comprehensive income equation
net income (revenues, expenses) + gains - losses + other comprehensive income
revenues
inflows or other enhancements of assets of an entity or settlements of its liabilities
from delivering or producing goods, rendering services, or other activities
constitute the entity's ongoing major or central operations
expenses
outflows or other using up of assets or incurrences of liabilities
from delivering or producing goods, rendering services, or carrying out other activities
constitute the entity's ongoing major or central operations
gains
increases in equity
from peripheral or incidental transactions
with non-owners
losses
decreases in equity
from peripheral or incidental transactions
with non-owners
concept 5 when do we recognize revenues/gains?
when realized or realizable AND earned
realized
converted to cash or claims to cash
cash or a/r
realizable
assets received are readily convertible into known amounts of cash or claims to cash
readily convertible
interchangeable units w/quoted prices in an active market that can easily absorb the units
earned
the goods and services associated with the revenue have been provided

earnings process of the firm is substantially complete
revenue is realized and earned when:
persuasive evidence of an arrangement exists
delivery has occurred or services have been rendered
the seller's price to the buyer is fixed or determinable
collectibility is reasonably assured
recognize revenue at point of sale/delivery when right of return exists if:
seller's price is substantially fixed/determinable
buyer has paid or is obligated to pay; obligation not contingent on resale
obligation not changed in event of theft or physical destruction of product
buyer for resale has economic substance apart from seller
seller has no future significant obligation to bring about resale
amount of returns can be reasonably estimated
returns are not reasonably measurable if
product's value is susceptible to significant external factors
right of return exists over a relatively long period of time
little historical evidence exists under current conditions
transactions are relatively unique and small in number
multi-element arrangements
multiple goods/services bundled together for one price
delivered/provided to customer at different times
customer can have return rights or cancellation rights before all elements are delivered
completed contract method
defer all revenue and costs during production
recognize all construction revenue and costs of construction when the contract is completed
recognize loss immediately
percentage of completion method
recognize a portion of the estimated gross profit each period during construction
recognition based on progress to date and estimated costs to complete the project
recognize losses immediately
contract
agreement by two or more parties that creates enforceable obligations
rights
a claim to customer consideration
performance obligation
obligation to provide goods or services to customer
Steps to new revenue recognition
is there a contract?
identify the rights & obligations
determine transaction cost "total consideration"
allocate transaction cost to performance obligation
recognize revenue when performance obligation is satisfied
account for multiple performance obligations separately if
assets underlying obligation are distinct AND are provided at different times
rights > obligations
contract is asset
rights < obligation
contract is liability
when to recognize revenue (new proposal)
when contract asset increases or contract liability decreases from satisfaction of performance obligation
when is performance obligation satisfied?
when underlying asset is provided to customer and customer controls the benefit