Question

Let's do a search on the term "deferred revenue" in the codification database. Discuss one aspect of the authoritative literature on this topic.

*Please do not provide an answer from you old data base. I saw the one already posted and I am still confused. Provide the quoted authoritative article.

Answer 1

Paragraph 932-605-25-2 discusses the revenue recognition for the extractiveactivities of oil and gas. It notes that occasionally, producers and purchasers of gaswill construct agreements where the purchaser of the gas commits to obtaining orpaying for a certain amount of gas per year from the producer. Typically, whatever ispaid in excess of the purchase price of gas can be recovered from future purchasesthat are in excess of minimum quantities. If the purchaser is not permitted to do so,then the producer must record revenues to the extent of the minimum contractedquantity. If the purchaser is permitted to make up deficiencies, then the amount paidin excess of the purchase price should be recorded as deferred revenues