In short
An output method measures progress on a performance obligation satisfied over time by the value to the customer of goods or services transferred to date, using measures such as units delivered, milestones reached or surveys of work performed.
Key takeaways
- If the seller has a right to invoice an amount that directly matches the value transferred, it can recognize revenue in the amount invoiced.
- Units delivered can misstate progress when significant work in process exists.
- Input methods, such as costs incurred, are the alternative.
Where it's tested
BAR: Revenue for Specific Arrangements — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A contractor's fixed-price contract of $5,000,000 now has total estimated costs of $5,600,000. Costs incurred to date are $2,800,000. How should the expected loss be recognized?