special issues in steps 3-5

if transaction price is fixed, then the price = _____?

if transaction price is fixed, then the transaction price = fixed price

what is the difference between a principal performance obligation and an agent performance obligation

principal performance obligation: Is to provide the good or service to the customer

Agent performance obligation:To facilitate a transaction between the principal and the customer

how do you know if the entity is a principal or an agent?

1. Entity has primary responsibility to transfer a good or service to the customer

2. Entity has inventory risk

3. Entity has discretion to set prices

…Then it is most likely a principal

what is variable consideration?

when transaction price is UNCERTAIN because part of the cost depends on future event

how do you solve using expected value

step 1: create a matrix

step 2: multiply price $ with probability %

step 3: add them all together

what is the difference between AR and a contract asset

AR: means you finished everything and you are just waiting for the money

Contract asset: means there is still work that needs to be done, but it is partially finished

what is a consignment?

(an agent)

A consignment is an arrangement where one person or business gives goods to another person or business to sell, but the original owner keeps ownership of the goods until they are sold.

would managers rather recognize revenue at a point in time or over time?

overtime because it means they can recognize revenue before the end of the period.

contract liability is the same thing as deferred rev

read again

what is the difference between adjusted market assessment, expected cost plus margin, and residual approach