Matt and Jim welcome back friend of the podcast Diana Gilbert, a senior consultant who leads the technical accounting practice for the accounting firm of RoseRyan, to answer the fundamental question, “What is the Revenue Recognition Principle?”
More specifically, the discussed principle(s) include the following for revenue to be recognizable:
(a) having a clear agreement between parties, or contract
(b) an ability to collect the price from the customer
(c) knowing what the customer will pay, via fixed and determinable price
and the ability to deliver what the customer is purchasing for revenue to be earned.
In a handy deeper dive on some aspects surrounding the ‘Revenue Recognition Principle,’ the trio review the various types of contracts, how a price might not be ‘fixed and determinable,’ the obvious and not-so-obvious considerations when it comes to collectability and what delivery of goods or services really means.
There’s a lot to the Revenue Recognition Principle.
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