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REVENUE RECOGNITION
AND
MEASUREMENT
Prof. Anjali K
1.Net increase in owners’ equity
from operation of the business
2.Revenue generated less expenses
and losse...
Prof. Anjali K
Methods of generating
Income
1.Sale of product or services to
customers
2. Supply of firm’s resources to ot...
Prof. Anjali K
REVENUE
Operating Revenue :
Revenue generated from the
operation of the business
Non operating Revenue :
...
Prof. Anjali K
Receipts
 Capital receipts
Revenue Receipts
Prof. Anjali K
Revenue Recognition
1. At the point of sales :
Transfer of rights over the
goods by the seller to the buyer...
Prof. Anjali K
3. Construction Contracts
Less than ¼ of the work is completed:
No profit in the books of accounts
More tha...
Prof. Anjali K
4. Installment credit sales
If there is a reasonable certainty of
the receipts :
Revenue is recognized at
t...
Prof. Anjali K
6. Interest , Royalty and Dividend
a.Interest :-
Prof. Anjali K
6. Interest , Royalty and Dividend
a.Interest :-
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Revenue &expenses recogn

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Transcript of "Revenue &expenses recogn"

  1. 1. REVENUE RECOGNITION AND MEASUREMENT
  2. 2. Prof. Anjali K 1.Net increase in owners’ equity from operation of the business 2.Revenue generated less expenses and losses INCOME
  3. 3. Prof. Anjali K Methods of generating Income 1.Sale of product or services to customers 2. Supply of firm’s resources to other firms to use 3. Sale of assets and/or Investments
  4. 4. Prof. Anjali K REVENUE Operating Revenue : Revenue generated from the operation of the business Non operating Revenue : Revenue from Incidental or indirect to main activities of the business
  5. 5. Prof. Anjali K Receipts  Capital receipts Revenue Receipts
  6. 6. Prof. Anjali K Revenue Recognition 1. At the point of sales : Transfer of rights over the goods by the seller to the buyer for cash or cash equivalent 2. Providing service : Recognizes as the service is rendered
  7. 7. Prof. Anjali K 3. Construction Contracts Less than ¼ of the work is completed: No profit in the books of accounts More than 1/4th but less than ½ of th Work completed -- 1/3 of the profit More than ½ but less than 90% - 2/3 of the profit More than 90% is completed – Estimate the profit as if the contract is completed
  8. 8. Prof. Anjali K 4. Installment credit sales If there is a reasonable certainty of the receipts : Revenue is recognized at the time of delivery of goods 5. Production process Products have immediate marketability: Revenue may be recognized as soon as production process is completed
  9. 9. Prof. Anjali K 6. Interest , Royalty and Dividend a.Interest :-
  10. 10. Prof. Anjali K 6. Interest , Royalty and Dividend a.Interest :-
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