1. Criteria for Over-Time Recognition
An entity recognizes revenue over time if any of the following three criteria are met:
  • The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.
  • The entity’s performance creates or enhances an asset (e.g., work in progress) that the customer controls as the asset is created or enhanced.
  • The entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date.

2. Measuring Progress: Input vs. Output Methods
  • Input Methods: Recognize revenue based on the entity’s efforts or inputs relative to the total expected inputs (e.g., resources consumed, labor hours expended, costs incurred relative to total budgeted costs).
  • Output Methods: Recognize revenue based on direct measurements of the value transferred to the customer to date relative to the remaining promises (e.g., units produced, milestones reached, time elapsed).

If a performance obligation does not meet any of the over-time criteria, it is recognized at the point in time when control transfers to the buyer.
 
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