Each of the following definitions relates to terms relevant for revenue recognit
ID: 2470187 • Letter: E
Question
Each of the following definitions relates to terms relevant for revenue recognition. 1) an agreed-upon change in the type, quantity, or price of goods or services to be delivered 2) a promise in a contract with a customer to transfer goods or services 3) a contract term that could cause the amount of consideration received to be less than the amount expected 4) an agreement between two or more parties that creates enforceable rights and obligations 5) the costs that a seller incurs by obtaining the contract but would not have been incurred if the contract had not been obtained 6) arises when a customer's payment of consideration occurs prior to - the seller's performance 7) increases in assets or settlements of liabilities from activities that - are the company's ongoing major or central operations 8) represents the seller's unconditional right to receive consideration - from a customer 9) the amount of consideration a seller expects to be entitled to _ receive in exchange for providing the promised goods or services to the customer. Terms: a. Transaction price b. Performance obligation c. Contract d. Receivable e. Contract liability f. Revenues g. Incremental costs h. Contract modification i. Applicable constraint Required: Match each definition to the appropriate term.Explanation / Answer
Answer
1) an agreed upon change in the type, quantity, or price of goods or services tobe delivered
Answer : Contract modification
2) A promise in a contract with a customer to transfer goods or services
Answer : Performance obligation
3) a contract term that could cause the amount of consideration received to be less than the amount expected.
Answer : Applicable constraint
4) an agreement between two or more parties that creates enforceable rights and obligations
Answer : Contract
5) the costs that a seller incurs by obtaining the contract but would not have been incurred if the contract had not been obtained
Answer : incremental costs
6) Arises when a customer’s payment of consideration occurs prior to the seller’s performance
Answer : Contract liability
7) Increases in assets or settlements of liabilities from activities that are the company’s ongoing major or central operations
Answer : Revenues
8) Represents the seller’s unconditional right to receive consideration from a customer
Answer : Receivable
9) the amount of consideration a seller expects to be entitled to receive in exchange for providing the promised goods and services to the customer
Answer : Transaction price
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