Under ASC 606, which of the following is an indicator that revenue should be recognized at a point in time rather than over time?

Answer options:

The customer simultaneously receives and consumes the benefits

The performance creates an asset with no alternative use and the entity has an enforceable right to payment

The customer controls the asset as it is created

The entity has transferred legal title and physical possession to the customer

How to approach this question

Revenue is Over Time if ANY of A, B, or C are true. If none are true, it is Point in Time (usually indicated by transfer of title, possession, risks/rewards, acceptance).

Full Answer

D.The entity has transferred legal title and physical possession to the customer✓ Correct

Transfer of legal title, physical possession, significant risks and rewards of ownership, and acceptance are indicators that control has transferred at a point in time. The other options are the specific criteria for recognizing revenue over time.

Common mistakes

Confusing the criteria.

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