1, identify the contract with the customer;
2. Determine the individual's performance of obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to each individual performance obligation;
5. Income is recognized when fulfilling personal performance obligations.
What is revenue recognition?
Revenue recognition refers to the time when revenue is recorded. There are two problems to be solved in revenue recognition: first, timing; The second is measurement. Time refers to the time when income is recorded in the account book; Measurement refers to the registered quantity.
How is the income?
Income refers to the total inflow of economic benefits formed by enterprises in their daily activities, which will lead to the increase of owners' rights and interests and has nothing to do with the capital invested by owners. The characteristics of income are as follows:
1, income is the inflow of economic benefits formed by the daily activities of enterprises;
2. Income will inevitably lead to the increase of owners' equity;
3. Income does not include the inflow of economic benefits generated by the owner's investment in the enterprise.
According to the nature of income, income can be divided into sales of goods, provision of labor services, transfer of asset use rights and construction contract income.
The income from selling goods refers to the income realized by enterprises through selling goods, such as the income realized by industrial enterprises manufacturing and selling products and commercial enterprises selling goods.
Income from providing labor services refers to the income obtained by enterprises from labor services such as construction and installation, repair and replacement, transportation, warehousing and leasing, finance and insurance, post and telecommunications, consulting and brokerage, culture and sports, scientific research, technical services, education and training, catering and accommodation, agency, medical and health care, community services, tourism, entertainment, processing and so on.
The income from the transfer of the right to use assets mainly includes interest income, royalty income, rent charged for renting assets, interest earned from bond investment, cash dividend income from equity investment, etc.
Construction contract income refers to the project income realized when the project price is settled with the contractor when the project image progress or project stage stipulated in the contract is completed.
Income can be divided into main business income and other business income.
Main business income refers to the income obtained by an enterprise from its main business activities, which can be determined according to the main business scope in the enterprise business license.
Other business income refers to the income generated by the enterprise's non-recurring and part-time business. Generally, it includes: after-sales service income of commercial housing, sales income of materials and rental income of fixed assets (equipment). ), etc.
Five conditions for revenue recognition
If the contract signed between the enterprise and the customer meets the following five conditions at the same time, the enterprise shall recognize the income when the customer obtains the control right of the relevant goods:
1. The parties to the contract have recognized the contract and promised to perform their respective obligations;
2. This contract defines the rights and obligations of both parties related to the transfer of goods;
3. There are clear payment terms related to the transferred goods in the contract;
4. The contract is commercial in nature, that is, the performance of the contract will change the risk, time distribution or amount of the future cash flow of the enterprise;
5. The consideration that the enterprise has the right to obtain because of transferring the goods to customers is likely to be recovered.