Requirement 2 Delivery is the normal revenue recognition point, based on the presumption that the risks and rewards of ownership pass on this date and that the sales amount is realizable. Revenue recognition on cash receipt is appropriate when the account receivable is considered so doubtful that it fails the realizability test; in these circumstances, revenue cannot be recognized prior to collection. Revenue recognition on production is appropriate only for commodities with stable sales prices and markets where the sales effort and costs are trivial but is not permitted under except for biological assets and agricultural produce.
Requirement 2 Delivery is the normal revenue recognition point, based on the presumption that the risks and rewards of ownership pass on this date and that the sales amount is realizable. Revenue recognition on cash receipt is appropriate when the account receivable is considered so doubtful that it fails the realizability test; in these circumstances, revenue cannot be recognized prior to collection. Revenue recognition on production is appropriate only for commodities with stable sales prices and markets where the sales effort and costs are trivial but is not permitted under except for biological assets and agricultural produce.
FA2_Ch6_text_solutions.docx