BUS 251 Lecture Notes - Lecture 5: Accrual, Weighted Arithmetic Mean, Net Income

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Anne Mcdonald

Document Summary

Revenue recognition and the statement of income: revenue recognition. In ch. 3 we used the accrual basis of accounting to record revenue. Revenue could be recognized before, at the same time as, or after the related collection of cash: revenue recognition. Gaap lists criteria to be met, which require judgment to apply there may not always be a clear-cut answer: revenue recognition. Ifrs says that revenue should be recognized at the earliest point when the following 5 criteria are met: When revenue is recorded, all costs associated with earning that revenue must be estimated and recorded. A company sells a product for on november 1st, 2017, and offers the customer a free one year warranty. Historically the company spends 5% of its revenues covering warranty costs. 31st, the customer has made no claim under the warranty. In 2018, the company actually spent , rather than the estimated , in fixing this product while still under warranty.