1: Identifies the "contract" signed 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 various performance obligations.
5. Income is recognized when fulfilling personal performance obligations.
1. general principle: revenue should be recognized when the enterprise has fulfilled its contractual obligations, that is, the customer has obtained control over the relevant goods or services.
2. If the contract signed between the enterprise and the customer meets the following conditions at the same time, the enterprise shall recognize the income when the customer obtains the control right of the relevant goods or services:
(1) All parties to the contract recognize this contract and promise to perform their respective obligations;
(2) The contract stipulates the rights and obligations of both parties related to the transferred goods or services;
(3) The contract has clear payment terms for the transferred goods or services;
(4) The contract has commercial essence, 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 for transferring goods or providing services to customers is likely to be recovered.
The current standards distinguish between selling goods, providing services, transferring the right to use assets and construction contracts, and adopt different revenue recognition modes respectively, while the new standards no longer distinguish business types.
The current standard takes "risk reward transfer" as the judgment basis, and the new standard takes "control right transfer" as the judgment standard of revenue recognition time.
The description of risk-reward transfer in current standards is not specific enough, which makes it difficult to grasp the time point of single business income in practice. The new standard judges whether the control right is transferred according to the delivery conditions agreed in the contract. Only when the enterprise no longer has the residual obligation to transfer the goods to customers, and the received consideration does not need to be returned, can it meet the conditions of revenue recognition.