Learning Objective $06-03$ Explain when it is appropriate to recognize revenue over a period of time.

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Revenue should be recognized over time when a performance obligation is satisfied over time. That occurs if $(1)$ the customer consumes the benefit of the seller$$s work as it is performed, $(2)$ the customer controls the asset as the seller creates it$,$ or $(3)$ the asset has no alternative use to the seller and the seller can be paid for its progress even if the customer cancels the contract.

Criteria for Recognizing Revenue over Time

Knowledge Check $01$

Which of the following are criteria that must be met before revenue can be recognized over time?

Note: Select all that apply.

Check All That Apply

The customer consumes the benefit of the seller$$s work as it is performed.

The customer consumes the benefit of the seller$$s work as it is performed.

The customer controls the asset as it is created.

The customer controls the asset as it is created.

The seller is creating an asset that has an alternative use to the seller, and the seller has the legal right to receive payment for progress to date.

The seller is creating an asset that has an alternative use to the seller, and the seller has the legal right to receive payment for progress to date.

The seller is creating an asset that has no alternative use to the seller, and the seller has the legal right to receive payment for progress to date.

The seller is creating an asset that has no alternative use to the seller, and the seller has the legal right to receive payment for progress to date.