Revenue recognition

Revenue Recognition Case
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Revenue recognition is one of the most common issues that an auditor faces when working with companies. This is due to the differences in the products and services offered from companies to their customers. For example, revenue recognition for physical items is different than offered services where the company might be obligated to follow up on customer’s needs in a future date. a- According to the US Securities and Exchange Commission (SEC), there are general criteria on revenue recognition that…...
How Sab101 Effects Wareham Sc Revenue Recognition
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How SAB affects Wareham’s revenue recognition? Accordingly to SAB 101, all of the following conditions should be accomplished to recognize revenue. During our analyses, we have identified several missing conditions in current situation, accordingly to information provided. * Evidence of Order Arrangement: SAB 101 requires an evidence to identify any transaction as a formal sales order. During our analyses we have found that in the sales transactions tested by Soma Desai, only the Technology Devices Division’s newly adopted sales strategy…...
Revenue Recognition in Auditing
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Revenue is the electricity that drives business. Revenue has been the starting point on every income statement generated, every sales meeting conducted, and is on every entrepreneur’s wish list. The basic concept for revenue recognition is that revenue should not be recognized until it is realized or realizable and earned. There are also four criteria must be met in order to recognize revenue: persuasive evidence of an arrangement exists: Consider the substance of the transaction and not merely its form.…...
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Eye Vision Case 10-11
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Eye Vision Inc, a long-standing medical device manufacturer, has signed a contract to sell Holland Hospital the Clear View Laser and a two-year separately priced maintenance plan for $1 million and $0.2 million respectively. On a when-and-if available bais, Eye Vision Inc. will provide software updats that is embedded with the Laser to maintainance purchasor. The software has never been sold without Laser for its functional necessity. In this memo, as explained below, we conclude that: 1. Eye Vision’s arrangement…...
Parmalat Accounting Scandal
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Summary After eluding financial analysts and investors for a long time, Parmalat went bankrupt later in December, 2003 and many of their board of directors have been arrested since then. Here is a brief summary of the events: In the late 1980’s, Parmalat’s financial situation was poor due to investment in side businesses. i.e. TV network, Parmatur, football teams (Palmeiras, Parma, etc). Cash siphoning through these companies was estimated to be total of € 10 Bn. In 1990, Parmalat went…...
Revenue Recognition
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The issue of revenue recognition practices is an area that has received a lot of attention from regulators. Whenever there is a report of financial restatements or negative earnings, regulators pay extra attention to review the financial statements in order to verify that that there are not any indications of financial fraud or that the organization overstepped their boundaries in the area of managed earnings. The reason that regulators have taken a special interest in financial accounting and potential fraud…...
Comparison of IFRS To GAAP in Business Management
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There are several differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). The IFRS is considered more of a "principles based" accounting standard in contrast to U.S. GAAP which is considered more "rules based." By being more "principles based", IFRS, arguably, represents and captures the economics of a transaction better than U.S. GAAP. As a team me collaborated to answer the following seven questions. IFRS 2-1: In what ways does the format of…...
Revenue-Recognition Problems in the Communications Equipment Industry
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1) In late 2000, Lucent announced that revenues would be adjusted downwards by $679m as a result of revenue recognition problems. Yet the firm’s market capitalization plummeted by $24.7bn. Why do you think the market reacted so negatively to Lucent’s announcements of the problems? The large drop in market capitalization is probably due to several factors. Historically, Lucent had successfully met analysts’ projections for 15 consecutive quarters before announcing, in January 2000, a major shortfall in profits relative to previous…...
Importance of Revenue Recognition
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The study has been conducted to have a view on Revenue Recognition and how is important for entities in financial reporting and the link between revenue recognition and creative accounting. The primary issue in accounting for revenue is to determining when to recognize revenue. Revenue is recognized when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably. There are identifiable criteria to be met and for revenue to be recognized.…...
Biovail Case Study
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Biovail Corporation, a major Canadian pharmaceutical company listed on the New York Stock Exchange, announces that it will miss its quarterly earnings target by $25 to $45 million, blaming $10 to $15 million of the shortfall on a truck accident involving a shipment that left its facility on the last day of the quarter. The case was ultimately prosecuted by the U.S. Securities and Exchange Commission (SEC). The case is centered on the question of revenue recognition and how the…...
Financial Statements Review
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2. Review the Financial Statements: Income Statement from the Accounting and Bookkeeping lesson under the Business Finance section of this course. Use the information from the example income statement for Jamie's Bead Jewelry to answer the questions below. a. What are the two sources of revenue for the company? (0.5 points) b. What is the company's total revenue? (0.5 points) c. What is the company's net profit? (0.5 points) d. Is the company experiencing a profit, or a loss? (0.5…...
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How Sab101 Effects Wareham Sc Revenue Recognition

...But, since entity provides some custom products&services, a standard pricing policy would be required to prevent possible problems. * Collectability of Sales Proceeds: SAB 101 also requires that entity should be able to collect the related sales ...