Which of the following statements is correct about the revenue recognition criteria for a performance obligation satisfied over time?
A)The outcome of the performance obligation must be reasonably estimable before the percentage of completion method can be used to record revenue.
B)The selling entity creates an asset that the selling asset controls..
C)The selling entity creates an asset with an alternative use to the selling entity
D)The selling entity does not have an enforceable right to payment for the performance completed to date.

Question

Quizplus · Accepted Answer

The outcome of the performance obligation must be reasonably estimable before the percentage of completion method can be used to record revenue. This means that the selling entity must be able to estimate the total amount of revenue that will be earned for the project and the percentage of the project that has been completed at the end of each reporting period. Without this ability to estimate, the percentage of completion method cannot be used and revenue recognition should be deferred until the performance obligation is fully satisfied.

Which of the Following Statements Is Correct About the Revenue