ASPE 3400 Revenue Recognition

ASPE Criteria (PMC)

Performance - were risks and rewards transferred to the buyer (consider point of delivery, timing, business practices, returns)

Materiality - can consideration be measured

Collection - can collection be reasonably assured

ASPE performance and LT contracts

Percentage of completion - revenue recognized over time based on time, costs incurred, or # of acts (consider deducting year 1 from year 2 when calculating year 2)

Completed contract - recognize revenue only when completed or unable to measure progress

Sale of goods journal entries

2 entries - 1 for cash vs revenue/deferred revenue and 1 for GOGS vs Inventory

Revenue from interest, royalties, or dividends

As no acts are performed, only consider MC criteria

Payments from seller to buyer

Discounts and rebates are netted against revenue, reimbursement of specific costs that are a identifiable benefit to seller are recognized separately, goods sold to seller are recorded separately

Multiple deliverables (Bundled sales)

Recorded separately if criteria is met: performance of remaining deliverables is probable, and deliverables have value on their own

Defer portion of revenue and recognize over time

Allocated based on relative stand-alone selling price

Allocation of bundled sale

Find bundled price (900), price of good 1(800), and price of service 1(200)

good 1 + service 1 = stand alone price (1000)

Allocate by dividing goods by standalone and then multiply against bundle price ((800/1000)×900)

If standalone price is not available, use methods (2)

Adjusted market assessment - estimates price by finding a comparable on the market

Expected cost plus margin

ASPE revenue presentation

Net basis

Broken down into categories on the I/S, or if not then disclosed on the financials