Question

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, now part of ASC 606 (FASB2014a). One of the most significant revenue sources for Alibaba Group is revenue from pay-per-click advertising services. Apply the five steps in the revenue recognition model of ASC 606 to account for revenue from pay-per-click advertising services. Prepare the necessary journal entries. (Ignore any transaction amounts in the journal entries.)  

Answer 1

REVENUE FROM CONTRA CTS WITH ASC-606 is revenue recognition standard issued by FASB and IASB on May 28, 2014 This standard increases the comparability of the financial statement on a wider level five steps in Revenue recognition from Contractswit h customer ITm Application of this standard will come into force when there isa contract entered with the customer.All the terms mentioned has been agreed upon and rate of contract has been determined. Check whether there is obligation by both the parties to the contract One party has the obligation to perform the contract and the other has obligation to pay to the other party The transaction price is the consideration received by the party who has the performance obligation.It shauld include every component of consideration paid whether cash or kind. This needs to happen where there are more than one performance obligation and allocation to each performance to be made Such allocated amounts should be considered as revenue After the transfer of goods or service or performance obligation the revenue should be recognised ournal entries in case of PPC advertisin nu Date Particulars Debit($) Credit($) 1.10.18 Reoeivable (Debtor's account) To Deferred Revenue A/c xxXX (Based on performance obligation) rrm Date Particulars Debit (S) Credit ($) 31.12.2018 Deferred revenue To Revenue A/