Boston Automation Systems, Inc. Essay

1388 Words6 Pages
Osman Harac 300624875 Boston Automation Systems, Inc. 1. What is (are) Boston’s current revenue recognition policy (ies)? As of 1999 annual report, the company recognizes the revenue upon shipment. But this will change with SAB 101. The company will wait until the delivery and customer acceptance to recognize the revenue In addition to that they also calculate the estimated warranty costs. The company recognizes the service revenues as the services are provided (not before the services are provided) The Company does not count in service revenue with other revenues (revenues from product sales and installation, maintenance) For long term certain contracts, the company uses percentage of completion method for revenue recognition.…show more content…
After estimating the warranty obligations, the company should recognize the revenue upon delivery. Silicon Devices, Inc. Silicon Devices, Inc. wants the equipment to fit and integrate into their product line and still meet all the standard published vendor specifications. The division has never modified the equipment for this specific product line before. Therefore, the division cannot test and say the equipment will meet all the vendor specifications in that particular product line before shipment. For this reason the division should wait for revenue recognition until the equipment is installed to customer’s product line and meet all the vendor specifications. B- Advanced Technology Division This division sells complex manufacturing equipment and these equipments require installation. The division either sends their own staff to make installations or work with a general contractor. Title to the equipment passes to the customer upon delivery. Analog Technology, Inc. Customer wants the equipment to be integrated into a larger production line. At customer’s request, the contract includes a number of customer-specific technical and performance criteria regarding speed, quality, interaction with other equipment, and reliability. Because of the nature of the equipment, division is unable to demonstrate that the equipment will meet the

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