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Question

What are the 5 criteria for revenue recognition?


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Solution

The five criteria for revenue recognition are:

  • Identifying the contract with the business client.
  • Identifying the performance obligation mentioned in the contract.
  • Identifying the predetermined prices associated with the contract.
  • Distributing the transaction price as mentioned in the contract.
  • Recognising the revenue when the business delivers the obligations that are mentioned in the contract.

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