During the current year,BMI Corporation sold $1,250,000 in goods that cost $750,000.Cash sales were $500,000 and credit sales $750,000.BMI collected $500,000 of the credit sales during the year.What amount of revenue should BMI recognize for the year under the revenue recognition criteria of the contract-based approach?

Question

Quizplus · Accepted Answer

Under the contract-based approach to revenue recognition, a company recognizes revenue when it satisfies a performance obligation by transferring a promised good or service to a customer. The amount of revenue recognized is the amount the company expects to be entitled to in exchange for those goods or services. In this case, BMI Corporation has transferred goods worth $1,250,000 to customers (both cash and credit sales), fulfilling its performance obligations. Therefore, it should recognize $1,250,000 in revenue for the year, regardless of whether the cash has been collected for all sales.

During the Current Year,BMI Corporation Sold $1,250,000 in Goods That