Final answer:
When recognizing income, the actual amount received is generally the amount to be recognized. However, there may be cases where an alternative amount is recognized due to uncertainties in collectability or potential returns. Professional judgment and adherence to accounting standards are important in determining the appropriate alternative amount.
Step-by-step explanation:
When it comes to recognition of income, there is generally only one amount that should be recognized, which is the actual amount received from the sales of goods or services. However, in certain cases, an alternative amount may need to be recognized if the actual amount cannot be determined with certainty. This can happen if there are uncertainties regarding the collectability of the sales or the likelihood of returns.
For example, if JK Bakery sells goods to a customer but is unsure if the customer will actually pay for them, an alternative amount may need to be recognized based on the estimated collectability of the sales. Similarly, if there is a high likelihood of returns, an alternative amount may need to be recognized to account for potential refunds.
It's important to note that recognizing alternative amounts should be done in accordance with applicable accounting standards and guidelines, and professional judgment may be required in determining the appropriate alternative amount.