Asked by Grace Dillon on May 27, 2024
Verified
If the critical event and measurability conditions are not satisfied,revenue may be recognized after the sale
A) when legal ownership passes to the seller.
B) when cash is collected.
C) as the goods are shipped.
D) on the receipt of goods by the customer.
Critical Event
A significant occurrence or change that impacts an organization's operations or decision-making process.
Measurability Conditions
Criteria used to determine whether the financial impact of an event can be reliably measured and should be recognized in the financial statements.
- Discern the differences and concurrences regarding revenue recognition in U.S. GAAP and IFRS.
Verified Answer
MA
Melanie AndradeMay 28, 2024
Final Answer :
B
Explanation :
When the critical event and measurability conditions are not satisfied, revenue recognition may be deferred until cash is collected. This approach ensures that revenue is recognized only when it is reasonably certain, which aligns with the conservatism principle in accounting.
Learning Objectives
- Discern the differences and concurrences regarding revenue recognition in U.S. GAAP and IFRS.
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