Revenue Arrangements Responses Revenue is recognized based on a five-step process that is applied to a company’s revenue arrangements. Answer the followin

Revenue Arrangements Responses Revenue is recognized based on a five-step process that is applied to a company’s revenue arrangements.

Answer the following questions in the Discussion Board:

Don't use plagiarized sources. Get Your Custom Essay on
Revenue Arrangements Responses Revenue is recognized based on a five-step process that is applied to a company’s revenue arrangements. Answer the followin
Just from $13/Page
Order Essay

Briefly describe the five-step process.
Explain the importance of contracts when analyzing revenue arrangements.
How are fair value measurement concepts applied in implementation of the five-step process?
How does the five-step process reflect application of the definitions of assets and liabilities?

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Financial accounting and accounting standards. Intermediate accounting (16th ed.). (p. 1047). New York, NY: John Wiley & Sons, Inc.

Just do response each posted # 1 to 3 down below.

Posted 1

Hello all,

The five steps of recognizing revenue are: identifying the contract with customer, identifying the separate performance obligations in the contract, determine the price, allocate the transaction price to the separate performance obligations, and recognize revenue when the contract obligations are complete.

Contracts are important because they give the detail of what is required from each party involved. As long as everything is written out completely in the contract each party has to follow through with what their obligation is to the other. Whether is it to do with a service/product or money owed.

There are instances where the companies are not paid in cash, but rather with a good, service, or non-cash considerations. When there is not actual cash that is being exchanged the company would then have to recognize the revenue at the fair value of what is received at the time.

The assets and liabilities are applied when the companies recognize revenue. When a company would deliver a service or a product it then has the “right to consideration” meaning that the contract in this case would be an asset. If the company receives the money before the product or service is delivered then the contract becomes a liability on the sellers part. These must be shown correctly on the companies financial statements.

Posted 2

a/ Revenue is recognized when goods or services have completely provided or performed. (Kieso, Weygant & Warfield, 2016, p. 981). There are five basic steps in revenue recognition. First, the entity needs to “identify the contract” where two or more associated parties agree with each other to the arrangement. Next, each performance obligation has to be identified and accounted for separately when there is more than one in the same contract. Then, figuring the expected receiving price from the customer to record appropriately. After that, if there are interrelated performance obligations, the price for each needs to be allocated and separated among each other; and each individual price could base on the standalone basis. Finally, when the performance is completed and satisfied, revenue is recognized in the correct accounting period.

b/ Contracts are important in a business environment. Contracts could be between a business and a business or individuals. A company analyzes contracts with customers to obtain revenue transactions. Contracts specify the agreement between parties and must be met by each party.

c/ Fair value is used to measure and apply in the five-step process of revenue recognition when there is noncash consideration. There is a situation when the two parties agree to exchange goods with goods or services, the company based on the basis of fair market value of what is received to record the transactions.

d/ “Company use an asset-liability approach to recognize revenue.” (Kieso, Weygant & Warfield, 2016, p. 1007). In other words, a company receives revenue based on the asset or liability coming from contracts with customers. When having contract assets with conditional rights, the company will only receive payment for one with a condition of completing the other. For example, if the contract has two separate obligations: A & B, in order to receive payment for A, the company has to complete the B as well.

Posted 3

The five step process consists of: Identify the contract with customers, Identify the separate performance obligations in the contract, Determine the transaction price, Allocate the transaction price to the separate performance obligations, Recognize revenue when each performance obligation is satisfied. (Kieso, Weygant & Warfield, 2016)

Contracts are important because it is where all of the details of an arrangement are laid out. It spells out exactly what each party involved must complete, the time it should take to complete, and what money is due once services have been rendered if any.

Companies receive consideration in the form of goods, services, or other noncash consideration. When these situations occur, companies generally recognize revenue on the basis of the fair value of what is received. (Kieso, Weygant & Warfield, 2016)

Companies use an asset-liability model to recognize revenue. For example, when a company delivers a product (satisfying its performance obligation), it has a right to consideration and therefore has a contract asset. If, on the other hand, the customer performs first, by prepaying, the seller has a contract liability. Companies must present these contract assets and contract liabilities on their statement of financial position.

Homework On Time
Calculate the Price of your PAPER Now
Pages (550 words)
Approximate price: -

Why Choose Us

Top quality papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional academic writers

We have hired a team of professional writers experienced in academic and business writing. Most of them are native speakers and PhD holders able to take care of any assignment you need help with.

Free revisions

If you feel that we missed something, send the order for a free revision. You will have 10 days to send the order for revision after you receive the final paper. You can either do it on your own after signing in to your personal account or by contacting our support.

On-time delivery

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & confidential

We use several checkers to make sure that all papers you receive are plagiarism-free. Our editors carefully go through all in-text citations. We also promise full confidentiality in all our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

You are welcome to choose your academic level and the type of your paper. Our academic experts will gladly help you with essays, case studies, research papers and other assignments.


Admission help & business writing

You can be positive that we will be here 24/7 to help you get accepted to the Master’s program at the TOP-universities or help you get a well-paid position.


Editing your paper

Our academic writers and editors will help you submit a well-structured and organized paper just on time. We will ensure that your final paper is of the highest quality and absolutely free of mistakes.


Revising your paper

Our academic writers and editors will help you with unlimited number of revisions in case you need any customization of your academic papers