Final answer:
The criteria for recognizing revenue from interest, royalties, or dividends is generally based on when the earnings are realized and become reasonably certain.
Step-by-step explanation:
Revenue recognition for interest, royalties, and dividends h.i.n.g.e.s on specific criteria. For interest income, revenue is recognized as it accrues over time based on the effective interest rate method, reflecting the amount of interest earned. Royalties are typically recognized as revenue when the underlying assets, such as intellectual property, are used or when the contractual rights to receive royalties are established.
Dividend revenue recognition occurs when the shareholder's right to receive payment is established, usually when the dividend is declared by the company's board. In all cases, the core principle is recognizing revenue when it's realized or when there's reasonable certainty of its realization. This often involves assessing the collectibility of the revenue, ensuring it's not just a potential but a probable inflow of economic benefits.
The criteria for recognizing revenue from interest, royalties, or dividends is the realization of earnings and reasonable certainty of their realization.