HypeeView Interview Questions and Answers

Allocation of transaction price is the process of assigning the total transaction price to various performance obligations in a contract.

• Allocation of transaction price is done based on the standalone selling price of each performance obligation.

• It is important to allocate the transaction price fairly and accurately to each performance obligation.

• For example, if a customer purchases a software license and a maintenance service for $1,000, the transaction price may be allocate...read more

ASC 606 outlines 5 steps for revenue recognition.

• Identify the contract with the customer

• Identify the performance obligations in the contract

• Determine the transaction price

• Allocate the transaction price to the performance obligations

• Recognize revenue when (or as) the entity satisfies a performance obligation

Contract liability refers to the obligation a company has to fulfill the terms of a contract with another party.

• Contract liability arises when a company agrees to provide goods or services to another party in exchange for payment.

• It represents the amount of revenue that has been recognized but not yet earned.

• Companies must carefully track and manage their contract liabilities to ensure they meet their obligations.

• Examples include prepaid subscriptions, unearned revenue, and d...read more

Unearned income is income received in advance for goods or services that have not yet been provided.

• Unearned income is also known as deferred income or unearned revenue.

• It is recorded as a liability on the balance sheet until the goods or services are delivered.

• Examples include prepaid rent, subscription fees, and gift cards.

• Once the goods or services are provided, unearned income is recognized as revenue on the income statement.

Ind AS 115 outlines a comprehensive model for revenue recognition

• Identify the contract with the customer

• Identify the performance obligations in the contract

• Determine the transaction price

• Allocate the transaction price to the performance obligations

• Recognize revenue when (or as) the entity satisfies a performance obligation

US GAAP is a set of accounting standards used in the United States for financial reporting by publicly traded companies.

• US GAAP stands for Generally Accepted Accounting Principles

• It provides a framework for how companies should prepare and present their financial statements

• US GAAP is overseen by the Financial Accounting Standards Board (FASB)

• It aims to ensure consistency and transparency in financial reporting

• Examples of US GAAP principles include revenue recognition, depreci...read more