Judgment Case 5-2Revenue recognition
Revenue earned by a business enterprise is recognized for accounting purposes at different times, according to the circumstances. In some situations revenue is recognized approximately as it is earned in the economic sense. In other situations revenue is recognized at point of delivery.
1. Explain and justify why revenue often is recognized as earned at point of delivery.
2. Explain in what situations it would be useful to recognize revenue as the productive activity takes place
3. At what times, other than those included in (1) and (2) above, may it be appropriate to recognize revenue?