I have a question. I do not understand the reasoning for this.Situation: An estimate of 2015 royalties from a patent on a new, untested medical diagnostic device that Dr. Fiddle bought last year from a colleague who invented but sold it because she is about to retire in Bermuda. No. The 2015 royalties are an estimate. So they are not included on the financial statement Business Entity Principle (Accounting Entity) It’s similar to an appraisal and it does not affect revenue for 2013-2014. Non-Monitory Principle. It’s an estimate, there is no cash transaction for 2013-2014.
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