FASB Revenue Recognition

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Recommended: The revenue recognition concept

Revenue recognition is a combination of the two concepts recognition and realization. Recognition is the process of reporting a transaction or event to the entities financial statements and realization is the process of converting non cash assets to cash or claims to cash (Schroeder 2014). Therefore, first revenue must be realized to be recognized. Revenue is one of the single most important items on the income statement. Revenue in general is one the most important factors to stakeholders. Due to the fact that revenue is so important to the entity and its shareholders, it is surprising now that we entered the cryptocurrency age that GAAP has not addressed the issue. Proper guidance on realization and recognition of revenue for cryptocurrency …show more content…

FASB accounting standards serve to promote the understandability, comparability, relevance, and reliability of financial reports. With bitcoin becoming wider excepted, stakeholders want the same assurance from entities that accept virtual currency. FASB bitcoin guidance is especially important when dealing with recognition and recording of revenue. Revenue recognition is an accounting principle under GAAP that determines the specific conditions to realized income as revenue. Typically, revenue is recognized when the service income is earned or the point where goods have transferred ownership. Traditionally, income is a centralized government backed currency, but bitcoin currency is nether of the following. The U.S. Treasury classifies bitcoin as a convertible decentralized virtual currency, hence bitcoin is a legal means of exchange. Revenue earned is one of the most important measures used by investors in assessing a company’s performance and prospects. Therefore, it is essential FASB issues accounting standards to determine proper recording and reported for bitcoin transactions. Virtual currencies are increasingly becoming a part of not only the virtual world, but the physical

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