(Satisfying Performance Obligations) Judy Schaeffer is getting up to speed on the new guidance on revenue recognition. She is trying to understand the revenue recognition principle as it relates to the five-step revenue recognition process. Instructions
(a) Describe the revenue recognition principle.
(b) Briefly discuss how the revenue recognition principle relates to the definitions of assets and liabilities. What is the importance of control?
(c) Judy recalls that previous revenue recognition guidance required that revenue not be recognized unless the revenue was realized or realizable (also referred to as collectibility). Is collectibility a consideration in the recognition of revenue? Explain.