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Revenue Recognition prior to completion or delivery?

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Revenues are at the core of the firm's ability to grow and prosper. Thus, they are central to the analysis of a firm's profitability. Although the time-of-sale method is the most common technique employed to recognize revenues, in some instances, a strong argument can be made for recognizing revenue before the product has been completed and delivered. Discuss circumstances in which this scenario is appropriate.

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Solution Summary

A paragraph explains the exception to the typical revenue recognition rule.

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Long-term contract accounting permits the recognition of revenue prior to completion and delivery.

When a product that takes multiple years to build is "presold" before it is finished, revenue ...

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  • MSc, University of Virginia
  • PhD, Georgia State University
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