ACTG 2011 Lecture Notes - Lecture 5: Contingent Liability, European Cooperation In Science And Technology, Finance Lease
Document Summary
At time of order, performance has not occurred (not a good time to recognie revenue) If you want to recognize revenue upfront, need an estimate. Current recognition time doesn"t meer ifrs / aspe. Earliest time they can recognie it = at shipping; note concern of collectibility. Three criteria of a lease under aspe- findout. Lease term, substantially covering the economic life of the asset. Present value of the lease payment something to do with future value. Potentially, the company has the intention to buy out the property at the end. One can argue this with historical evidence. (not the strongest argument) Under ifrs tho, normally speaking, implicit rate- is the return. Under ifrs if the implicit rate is known you have to use it. No borrowing rate you would use for a similar asset. (name for it) We don"t have the fair value so we cant use the criteria. Does it meet the criteria under aspe &or ifrs.
