Question

1. Revenue Recognition

In 2013 Airbus announced a contract to deliver 50 A380 airplanes to Emirates for $20 billion to be delivered between 2016 and 2018.

Required:

Outline the five‐step revenue recognition process for this transaction.

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the Performance Obligations in the Contract.

Step 3: Determine the Transaction Price.

Step 4: Allocate the Transaction Price to the Performance Obligations in the Contract.

Step 5: Recognize Revenue When (or as) the company Satisfies a Performance Obligation.

Answer 1

step1: Yes there is contract between two parties airbus and emirates to deliver of planes
Step 2:Performance obligation here is to deliver 50 planes at cost of 20bn within time frame 2016 and 2018
Step 3:The transaction price is $20bn
Step 4:The price $20bn will be allocated to planes to be delivered as per plane price
Step 5:The revenue will be recognized when the 50 planes are delivered and emirates have control over them