Question

does the performance obligation meet any of the criteria or recognition of revenue over time? 2. how should the entity recognize revenue for the satisfaction of its performance obligation? what amount of revenue should be recognized for the following periods: 2a. the three months ended june 30, 20x1? 2b. the three months ended september 30, 20x1? 2c. the three months ended december 31, 20x1?

Answer 1

A performance obligation can meet the criteria for revenue recognition over time if the customer receives benefits, controls the asset, or if there is an enforceable right to payment. Revenue should be recognized using a method that reflects the transfer of goods or services. The amount of revenue recognized should correspond to the progress made in fulfilling the obligation.

Step-by-step explanation:

According to the criteria for revenue recognition over time, a performance obligation can be recognized over time if at least one of the following conditions is met:

1. The customer receives and consumes the benefits of the entity's performance as it occurs.
2. The customer controls the asset as it is created or enhanced.
3. The entity's performance creates or enhances an asset that has no alternative use and the entity has an enforceable right to payment for performance completed to date.

For recognizing revenue from the satisfaction of a performance obligation, an entity should use a method that best reflects the transfer of goods or services to the customer. Examples of methods include output methods and input methods.

To determine the amount of revenue recognized for each period, the entity should consider the progress towards complete satisfaction of the performance obligation. The recognized revenue should be proportional to the progress made in fulfilling the obligation.