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The study text states that revenue should be recognised OVER TIME (as performance obligation is satisfied) when:
“(b) the entity’s performance creates or enhances an asset (for example,
work in progress) that the customer controls as the asset is created or enhanced, or
(c) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.”These 2 points are particularly difficult to understand. How can an entity’s performance result into the creation/enhancement of an asset? I am totally confused, kindly explain this to me brief and precisely.
Thank you
This is explained in my free lectures on Chapter 19 of our free lecture notes.
Sir I just downloaded the FA free notes and I watched your free lecture video yesterday but this was not explained that is why I wanted you to explain me that part here
What is explained in the lecture is all that is relevant for the exam in relation to this.
Your study text really is ridiculous in quoting all this from the accounting standard.
The study text usually does include complicated things as such. If it is not for our level then why is it even there??
You need really to ask the publisher of your study text 🙂
(However the texts are not generally written by tutors and always contain much more then is needed to be able to pass the exam well.)Ok I get it, thanks.
Does that mean that the question I typed in above is not relevant?
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