Case 04-7 Lighthouse

3548 WordsFeb 17, 201415 Pages
I. Succint Lighthouse provides a ship tracking service for shipping companies to locate their ships at sea, as well as knowing their speed and the weather they are facing. Lighthouse does a contract for the delivery and installation of the physical device that is capable of achieving this through a tracking service that calls for a second contract. The price for the dedicated hardware (exclusive to Lighthouse services) and installation is a single nonrefundable amount of $10,000 payable at completion of installation and acceptance by client. When this is done, the location service can be provided. The service contract which is generally for one year is paid monthly at $300 per month. Customers may cancel the service contract at anytime.…show more content…
Those Subsections (see paragraph 825-10-05-5) address circumstances in which entities may choose, at specified election dates, to measure eligible items at fair value (the fair value option). See Section 825-10-15 for guidance on the scope of the Fair Value Option Subsections of the Financial Instruments Topic. ________________________________________ General ________________________________________ Combine Subsections Related Exposure Draft > Revenue and Gains 25-1 The recognition of revenue and gains of an entity during a period involves consideration of the following two factors, with sometimes one and sometimes the other being the more important consideration: a. Being realized or realizable. Revenue and gains generally are not recognized until realized or realizable. Paragraph 83(a) of FASB Concepts Statement No. 5, Recognition and Measurement in Financial Statements of Business Enterprises, states that revenue and gains are realized when products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash. That paragraph states that revenue and gains are realizable when related assets received or held are readily convertible to known amounts of cash or claims to cash. b. Being earned. Paragraph 83(b) of FASB Concepts Statement No. 5, Recognition and Measurement in Financial Statements of Business Enterprises, states that revenue is

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