American Trucking Company

773 Words Sep 7th, 2015 4 Pages
The American Trucking Company has recently been experiencing an increase in stolen loads—a loaded tractor/trailer is stolen and the load sold. Loads of merchandise are often worth thousands of dollars, sometimes exceeding the value of the tractor/trailer. American Trucking, while wishing to recover both the load and equipment, seeks a way to locate the tractor/trailer at all times so they can dispatch their security team to retrieve the load before it is sold on the black market (as well as to retrieve the truck/trailer before it is vandalized). They have engaged the services of Truck Locators, a provider of locating services to the trucking industry.

Truck Locator’s Truck Finder services is a one-way messaging service that routes
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However amounts paid that are related to the devices are nonrefundable. Payments for the devices are due upon completion of the installation and final acceptance by the customer.

Truck Locator has hired to you to express an opinion on how to recognize the revenue from its Truck Finder services and devices. You are to write a letter, no longer than two pages, to the CFO of Truck Locator, John Wilton.

Case #1: Defend the position that the device and service agreements represent a single unit of accounting. Explain the accounting treatment for recognizing revenue under this assumption.

Case #2: Defend the position that the delivery of the devices represents a separate earnings process. Explain the accounting treatment for recognizing revenue under this assumption.

NOTE: As part of your two case research assignments, you need to search the online Accounting Standards Codification (ASC) for authoritative support for the positions you are taking in your solution. Your solution should contain specific references to the ASC standard numbers you are relying upon. The ASC can be located at http://aaahq.org/ascLogin.cfm and the userID and password are AAA51268 and LGU9z3k, respectively. They are case sensitive.

You will be graded on the following: 1. Problem identification—the appropriate problem is clearly identified and explicitly stated; 2. Proper use of grammar including subject-verb agreement, verb tense, sentence