USA Contract Date


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If a contract's effective date is in October but was signed in December, would rev recognition begin in Oct or Dec? Considering we haven't adopted the new standards
 
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kirby

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Hi Olive and give my regards to Popeye!
Not enough info in your writeup
If your facts assume, for example, a contract for services then were those services being performed in Oct in anticipation of the formal contract being signed in Dec? Or no services were performed until Dec?
So more info please.
 
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Hi Olive and give my regards to Popeye!
Not enough info in your writeup
If your facts assume, for example, a contract for services then were those services being performed in Oct in anticipation of the formal contract being signed in Dec? Or no services were performed until Dec?
So more info please.
Thanks :) Could you please reply for both scenarios - one where the services began in Oct and the other where they began in Dec? In both scenarios contract effective date was October but signature date Dec. Thanks!!
 
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kirby

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Assume
1) we have a services business (so we can discuss revenue recognition and not expense recognition)
2) Contract effective date 10/1
3) Contract signed 12/1

A) Services were performed in Oct in anticipation of contract being signed
You would record income in Oct IF you at least had a valid verbal agreement with the customer to do the work in Oct. If no verbal agreement, then you just made a gift to your "customer" in Oct.

B) No services performed until 12/1. Here - no service provided means no income for you to record for Oct and Nov.
This would be true even if contract was signed UNLESS contract had a provision that said you get paid even if no work is done (unusual).
 

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