Level I CFA: Understanding Income Statements Lecture 1

[@IFT-CFA]

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[@pradeephinduja4452]

What if the there is a warranty or maintenance given with product? When will revenue recognition will happen for the warranty or maintenance? The year in which the service is given or in the same accounting period?

[@IFT-CFA]

Under the matching principle of accounting, the estimated cost of honoring the warranty should be recognized in the period that the sales occur. IFT Support Team

[@hichamboukharsa1639]

Many thanks for this great video, in 15 min I am still confused why incremental cost should be recognised as an asset it counter intuitive as it is a cost it should be a liability.

[@siddharthchoudhary7913]

Expense which is to be recovered in the future

[@ryantpasaribu3119]

its because its a cost, cost means you pay/accuire something in order to produce products/services. like a basic material in manufacturing, you capitalize basic material cost as part of the final product which is an inventory asset

[@sanketsawant7475]

Sir u have skipped revenue recognition methods los, I see them on cyllabus any reason?

[@IFT-CFA]

Revenue recognition is discussed in section 3. IFT Support Team

[@kiddyentrepreneurshowtotut6085]

Great job

[@IFT-CFA]

Thank you IFT Support Team

[@twinkledhoka1176]

Can u please explain what is meant by the company will not have to reverse cumulative revenue

[@IFT-CFA]

Cumulative revenue = (Cost incurred to date ÷ Total estimated cost) x contract price IFT Support Team

[@neelmoradiya1389]

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