Step 5: Recognize Revenue When or As the Entity Satisfies Performance Obligations

                                        Recognize Revenue

The fifth and final phase of the 5-step model for revenue recognition centers on the recognition of revenue as the entity fulfills its performance obligations. This step is dedicated to determining when revenue should be acknowledged, based on the transfer of control of goods or services to the customer.

• Transfer of Control: The entity evaluates whether it has handed over control of the promised goods or services to the customer. Control can be relinquished over a period or at a specific moment, depending on the nature of the performance obligations.
•  Control Over Time: Control is regarded as transferred over time when one of the following conditions is met: 
• The customer acquires and consumes the benefits of the entity's work as it progresses.
• The entity's work creates or enhances an asset controlled by the customer.
•  Control at a Point in Time: Control is considered to be transferred at a specific moment when one of the following conditions is met:
• The entity possesses a current entitlement to payment for the asset. 
• The customer holds legal title to the asset.
• The customer has physical possession of the asset.
• The customer bears the significant risks and rewards of ownership.
• Fulfillment of Performance Obligations: Revenue is acknowledged as the entity fulfills each performance obligation. If control is passed over time, revenue is recognized throughout the satisfaction period. If control is transferred at a certain point, revenue is acknowledged at that specific juncture.

In essence, the fifth phase of the revenue recognition model revolves around recognizing revenue when or as the entity fulfills its performance obligations by evaluating the transfer of control over goods or services to the customer. This phase guarantees that revenue is acknowledged in a manner that reflects the timing of the entity's performance and the customer's receipt of benefits.