Question

Which of the following is true about revenue recognition under ASU 2014-09?

Multiple Choice
a-The realization principle guides the ASU.
b-Construction contracts are typically broken into the various separate goods and services that are included in them for purposes of revenue recognition.
c-The time value of money is considered when estimating all transaction prices.
d-Collectibility of the receivable is considered when determining whether revenue can be recognized.

Answer 1

Construction contracts are typically broken into the various separate goods and services for revenue recognition under ASU 2014-09.

Step-by-step explanation:

Under ASU 2014-09, the correct statement about revenue recognition is that construction contracts are typically broken into the various separate goods and services that are included in them for purposes of revenue recognition. This means that revenue is recognized as each good or service is delivered or completed, rather than recognizing it all at once when the contract is fulfilled.

Options a and c are incorrect because the realization principle doesn't guide ASU, and the time value of money is not explicitly considered under ASU 2014-09. Option d is also incorrect because collectibility of the receivable is not considered when determining revenue recognition under ASU 2014-09.