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Provided below is a list of several companies revenue recognition policies. Revenue Recognition Policy A The performance obligation is satisfied with the passage of time.
Provided below is a list of several companies revenue recognition policies.
Revenue Recognition Policy | |
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A | The performance obligation is satisfied with the passage of time. Interest is earned with the passage of time. Each period, income is accrued on loans even if customers have not yet paid the interest. |
B | The performance obligation occurs when the customer takes the merchandise (for in-store sales) or when the goods are delivered (for online sales). The company estimates product returns and reports an allowance at time of sale. |
C | The performance obligation is fulfilled when the customer takes the completed equipment. Revenues for financial or insurance services are recognized when the services are provided. |
D | The performance obligation is satisfied as the company builds and completes projects for customers. Revenue is recognized for long-term construction contracts based on the percentage of completion. |
E | The performance obligation occurs when the customer takes delivery of the merchandise and the right of return for regulated products has expired or costs of returns can be reasonably estimated. |
Indicate the appropriate revenue recognition policy for each of the following companies by selecting the corresponding letter in the answer prompts below.
Company | Revenue Recognition Policy |
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The GAP: a retailer of clothing items for all ages. | [ Select ] ["D", "A", "C", "B", "E"] |
GlaxoSmithKline: develops, manufactures, and markets pharmaceutical products; sells pharmaceuticals (many of which have regulated expiry dates) to retailers such as CVS and Walgreens. | [ Select ] ["C", "A", "E", "B", "D"] |
Deere & Company: manufactures heavy equipment, and sells that equipment to a network of independent distributors who then sell the equipment to customers. Company provides financing and insurance services to distributors and customers. | [ Select ] ["D", "A", "C", "E", "B"] |
Bank of America: lends money to individuals and corporations and invests excess funds in marketable securities. | [ Select ] ["B", "D", "A", "E", "C"] |
Johnson Controls: manufactures products for the government under long-term contracts. | [ Select ] ["B", "C", "D", "E", "A"] |
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