Revenues for certain commodities with a readily available market may be recognized at production since uncertainties with respect to the sale are likely to be minimal.

Question

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Certain commodities, such as oil and gas, have a stable and predictable market, which makes it possible to recognize revenue at the production stage. In such cases, uncertainties about the sale of the product are minimal, allowing for recognizing revenue at an early stage. However, this may not be applicable to all commodities and industries, and companies need to analyze their specific circumstances before recognizing revenue at production.

Revenues for Certain Commodities with a Readily Available Market May