Corporatefinanceinstitute com 1 The Corporate Finance Institute Accounting For more eBooks please visit

Revenue recognition at delivery will look like this:
DR Cash or Accounts Receivable
CR Revenue
When revenue is recognized, according to the matching principle, 
expenses must also be considered for:
DR Cost of Goods Sold
CR Inventory
Revenue Recognition before & after delivery
For the sale of goods, IFRS standards do not permit revenue recognition 
prior to delivery. IFRS does, however, permit revenue recognition after 
delivery.
There are situations when there are uncertainties regarding costs 
associated with future costs, violating the fifth criteria for revenue 
recognition outlined above.
For example, if a company cannot reliably estimate the future warranty 
costs on a specific product when this fifth criteria is met, at that point, 
revenue may be recognized.
Other reasons for revenue recognition after delivery include situations 
where the amount of revenue cannot be reasonably determined (i.e. 
contingent sales), inestimable returns, unassured collectability of 
accounts receivable, and risks of ownership remaining with the seller 
(i.e. consignment sales). 

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The Corporate Finance Institute
Accounting
Journal entries for the revenue recognition principle
Typical journal entries would look like:
•
DR Cash
•
CR Deferred Revenue
•
DR Deferred COGS
•
CR Inventory
Instead of crediting revenue and debiting COGS, deferred revenue 
and deferred COGS are used. When revenue can be recognized these 
deferred accounts are then closed to actual revenue and COGS:
•
DR Deferred Revenue
•
CR Revenue
•
DR COGS
•
CR Deferred COGS