Revenue Recognition

755 Words4 Pages
American Trucking Company has recently been experiencing an increase in stolen loads—a loaded tractor/trailer is stolen and the load sold. The merchandise is 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 messages from…show more content…
Payments for the devices are due upon completion of the installation and final acceptance by the customer. REQUIRED Truck Locators has hired you to express an opinion on how to recognize the revenue from its Truck Finder services and devices. The letter should include a discussion regarding how they should recognize revenue under when applying the new five-step revenue recognition process. For this letter, you are to search the online Accounting Standards Codification for authoritative support regarding how Truck Locators should recognize revenue. You should consider the following: 1. Please provide information as to why Truck Locators should recognize the transaction as a Single Performance Obligation. 2. In a separate paragraph, please provide information as to why Truck Locators should recognize the transaction as a Multiple Performance Obligation. Conclude as to whether this transaction is a single or multiple performance obligation 3. Please address the Accounting Standards Codification’s accounting for all items that may affect Truck Locators’ evaluation of the transaction price, including (but not limited to) variable consideration and volume discounts. 4. Please address the Accounting Standards Codification’s accounting for the Sales Right of Returns as relates to the services and/or devices provides for its customers. Conclude as to whether this standard is relative to (1) the
Open Document