Which condition is necessary to have all units in a multiple DeliveRAbles arrangement be considered separate units of accounting?
Which condition is necessary to have all units in a multiple DeliveRAbles arrangement be considered separate units of accounting?
To separate multiple deliverables under an arrangement into separate units of accounting, the following three criteria must be met: The delivered item must have value on a stand alone basis. The items have value on a stand alone basis if they are sold separately by any vendor or could be resold by the customer.
What is GAAP revenue?
GAAP Revenue means Income Statement Revenue that will be reported in the company’s financial statements in accordance with Generally Accepted Accounting Principles in the USA.
What is multiple element arrangements?
Revenues from contracts with multiple element arrangements are recognized as each element is earned based on the relative fair value of each element provided the delivered elements have value to customers on a standalone basis. Long-term contracts are accounted for using the percentage of completion method.
What is a multiple element transaction?
A multiple-element transaction is one in which there are separately identifiable components to each of which the recognition criteria must be applied in order to reflect the substance of the transaction. The total consideration for the transaction is allocated between the elements.
What does SAB 101 stand for?
Staff Accounting Bulletin
SAB 101 means the SEC Staff Accounting Bulletin No. 101 – Revenue Recognition in Financial Statements dated December 3, 1999. SAB 101 means Staff Accounting Bulletin No. 101 of the Securities and Exchange Commission issued December 3, 1999.
Are multiple-element arrangements a roadmap to applying the revenue recognition guidance?
The attached publication, Multiple-Element Arrangements—A Roadmap to Applying the Revenue Recognition Guidance in ASU 2009-13, which is the latest addition to Deloitte’s Roadmap series, summarizes the changes made by ASU 2009-13 and provides interpretive guidance on applying its provisions.
How are revenues from contracts with multiple element arrangements recognized?
Revenues from contracts with multiple element arrangements are recognized as each element is earned based on the relative fair value of each element provided the delivered elements have value to customers on a standalone basis.
What are the changes to GAAP for multiple deliverable arrangements?
This update will cause substantial changes to GAAP. New GAAP for multiple-deliverable arrangements will provide a clearer picture of the economic realities of such arrangements. Whether an element has an objective and reliable fair value, as previous GAAP requires for separation, is no longer important.
What are the fundamental changes in accounting standards due to ASU 2009-13?
The second fundamental change in standards due to ASU 2009-13 is the approach to the allocation of revenue to the various elements of a multiple-element arrangement. These elements to which revenue amounts are assigned by GAAP are referred to as separate units of accounting.
