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Revenue Recognition Policy: Metropolitan
Finance & Accounting
Pages 5 (1255 words)
The main aim of this memo is to show the result of the expenses and revenue recognition for Metropolitan environment service. …
In this manner there is no physical product leaving the premise in order for revenue to be earned. Throughout the examination some of the major areas of revenue income recorded by the Metropolitan in their books of accounts include the following; Disposal non-hazardous and hazardous waste materials, the cost of transporting of the waste materials from the customer premises to where the waste are going to be disposed off, there are also cost of materials purchased to assist the job being done, labor cost is also reflected in the revenue income, allowances expenses of the employees like travelling expenses and lastly there are tax expenses which has to be paid in time. In order to analyses each and every scenario is in order to know at what point does the ownership of the waste material passes from the customer to Metropolitan and when is the contract is valid. In the first scenario, when the customer is transporting the materials to the disposal site, then the contract has not been performed substantially and the Metropolitan should not record any revenue since the contract is not fully done, the revenue should be recorded on 20th after the successful destruction of that waste. According to the accounting standards a service can be rendered as a single act or as continuous process over a period of time, charges of the same services can also be spread over the period through which the work is done. ...
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