Five-step model analysis of Qujing industrial and commercial registration income confirmation and measurement

201July 5, 2007, the Ministry of Finance officially issued the "New Accounting Standards for Business EnterprisesNo. 14", which reformed the existing revenue recognition mode and made it clear that the core principle of revenue recognition is that "enterprises should fulfill their contractual obligations, that is, recognize revenue when customers gain control over related goods or services". Based on this core principle, the new standard sets a unified "five-step" model for revenue recognition measurement. So, what does this "five-step" model of income recognition and measurement specifically include? Let Mande Enterprise Services tell you.

Determine the contract with the customer.

The term "contract" as mentioned in this Law refers to an agreement between two or more parties with legally binding rights and obligations. Contracts are written, oral and other forms.

When signing a contract with a customer, an enterprise shall meet the following conditions:

1. This contract is commercial in nature, that is, the performance of this contract will change the risk, time distribution or amount of future cash flow of the enterprise;

2. The consideration that the enterprise has the right to obtain due to the transfer of goods to customers is likely to be recovered.

3. The parties to the contract have recognized the contract and promised to perform their respective obligations;

4. There are clear payment terms related to the transferred goods in the contract;

5. This contract stipulates the rights and obligations of both parties related to the transfer of goods or the provision of services (hereinafter referred to as "the transfer of goods");

Determine the individual's performance of obligations in the contract.

On the start date of the contract, the enterprise shall evaluate the contract, identify the individual performance obligations contained in the contract, and determine whether each individual performance obligation is performed within a certain period of time or at a certain time.

Performance obligation refers to the enterprise's commitment in the contract to transfer clearly distinguishable goods to customers. The performance of obligations includes both the explicit commitments in the contract and the commitments that customers reasonably expect the enterprise to perform when concluding the contract due to the publicly announced policies, specific statements or past customary practices of the enterprise. An enterprise's commitment to transfer a series of goods with the same substance and the same transfer method to customers, which can clearly distinguish the goods, should also be regarded as a single performance of obligations.

Meet one of the following conditions, for a certain period of time to fulfill obligations; Otherwise, at a certain point is to fulfill the obligation:

1. Customers can control the goods under construction during the performance of the enterprise.

2. Customers gain and consume the economic benefits brought by the enterprise performance.

3. The goods produced by the enterprise during the performance of the contract have irreplaceable uses, and the enterprise has the right to collect money for the accumulated performance completed so far during the whole contract period.

Determine the transaction price.

The enterprise shall determine the transaction price according to the terms of the contract and the previous practice. The transaction price refers to the amount of consideration that an enterprise expects to receive when transferring goods to customers. The money collected by an enterprise on behalf of a third party and the money expected to be returned to customers by the enterprise shall be accounted as liabilities and not included in the transaction price.

When determining the transaction price, enterprises should consider the influence of variable consideration, main financing components in the contract, non-cash consideration, consideration payable to customers and other factors.

Allocate the transaction price to each individual performance obligation.

If the contract contains two or more performance obligations, the enterprise shall allocate the transaction price to each individual performance obligation according to the relative proportion of the individual sales price of the goods promised by each individual performance obligation on the contract start date. After the start of the contract, the enterprise shall not redistribute the transaction price because of the change of individual sales price.

For the contract discount, the enterprise shall share it in proportion among the performance obligations. Contract discount refers to the sum of the individual sales price of the goods promised by each individual performance obligation in the contract higher than the contract transaction price.

If there is conclusive evidence that the contract discount is only related to one or more (but not all) performance obligations in the contract, the enterprise shall allocate the contract discount to one or more related performance obligations.

The contract discount is only related to one or more (but not all) performance obligations in the contract. If an enterprise uses the residual value method to estimate the individual selling price, it shall first allocate the contract discount to one or more (but not all) performance obligations in accordance with the provisions of the preceding paragraph, and then use the residual value method to estimate the individual selling price. The residual value method refers to the method by which an enterprise determines the individual selling price of a commodity according to the residual value of the contract transaction price minus the observable individual selling price of other commodities in the contract.

Revenue is recognized when each individual performance obligation is fulfilled.

An enterprise shall fulfill its contractual obligations, that is, recognize the income when the customer obtains the control over the relevant commodities. An enterprise shall measure its income according to the transaction price allocated to each individual performance obligation.

Under the condition of market economy, the new income criterion confirms income on the basis of contract, which is helpful to strengthen the contract consciousness of enterprises and standardize contract management, and will strongly promote the further maturity of China's market economy. In addition, the new income standard requires a unified income recognition model to recognize income, which will help enterprises to provide more reliable, comparable and transparent income information, thus providing a better basis for financial statement users to make economic decisions.

After reading the above, do you know what the five-step model of income recognition measurement is? I hope it helps you.

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