COMM-3016EL Chapter Notes - Chapter 6A: Debits And Credits
1 Mar 2018
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Aspe criteria are more general, requiring that revenue should reflect the work accomplished . If one of the criteria above is met, and the company can reasonably estimate its progress toward satisfaction of the performance obligations, then the company recognizes revenue over time. Under ifrs, if one of the criteria is met but an estimate cannot be made, then the company records recoverable revenues equal to costs until the uncertainty is resolved. Under aspe, the entity would use the completed-contract method as a default method and recognize revenues only at the end of the contract. Companies use various methods to determine the extent of progress toward completion . As stated in the chapter, companies identify the various measures & classify them as input or output measures: Input measures efforts devoted to a contract (ex. costs incurred or labour hours worked) Output measures track results (ex. floors of a building completed) Neither measure is universally applicable to all long-term project.
