Revenue Recognition over Time

Question 1

Input Method

Answer 1

recognizes revenue on the basis of the entity’s inputs to the satisfaction of the performance obligation relative to the total inputs to the satisfaction of the performance obligation

Question 2

Input Method equation
Year 1

Answer 2

Y1: Y1 cost/total cost=%
%*total expected revenue=Y1 revenue
Y1 revenue-Y1 costs=gross profit Y1

Question 3

Input Method equation
Year 2 or later (not final year)

Answer 3

Cost incurred to date (Y1+Y2 etc)/total cost=%
%/ total expected cost=cumulative revenue
Cumulative rev-Y1 etc=Y2 etc revenue
Y2 rev-Y2 costs=gross profit Y2

Question 4

Input Method equation
Final Year

Answer 4

Cumulative revenue to date-contract price=final year revenue
final year revenue-final year construction costs= gross profit final year