ACCOUNTG 321 Lecture 10: Chapter 5 pt.2
2 Mar 2017
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Document Summary
Special issues with the revenue recognition process: identifying the contract. Contracts can be explicit or implicit, oral or written. Has been approved by the seller and customer. Specifies the rights of the seller and customer. Is probable that the seller will collect the amount it is entitled to receive under the contract. Neither the seller nor the customer has performed any obligations under the contract and both the seller and the customer can terminate the contract without penalty: identify the performance obligations. Quality-assurance warranties (part of the performance obligation to deliver goods and services that are free of defects) Right of return (part of the performance obligation to deliver acceptable goods and services) Extended warranties a warranted is extended if either: the customer has the option to purchase the warranty separately, the warranty provides a service to the customer beyond quality assurance.
