Revenue Recognition

They may pose a problem when recognizing revenue, due to the fact that original GAAP criteria of determining a relative fair value determination is now out the window. Companies like Apple typically base their measurements against the relative selling price of the unit.

Apple Inc. designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players and sells a variety of related software, services, peripherals, and networking solutions. The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. (Source: Company Form 10-K)

Throughout history and in our own time, legitimate accounting methods have been utilized to fraudulently engage in manipulating activities that results in illicit gains to the perpetrators and losses to individuals and financial institutions.

Coverage of revenue recognition in intermediate accounting courses is typically limited to learning and applying the criteria for revenue recognition outlined in the Financial Accounting

Financial reporting practices and ethics have manifested an ocean of literature. This has mainly come from organization theorists that address accounting practices. These theorists and professionals have given fresh accountability measures. Their ideals give this industry the tools needed to survive, grow and prosper. The way an organization prepares and reports its financial information and handles its daily operations is in essence financial practices, and in the way it accomplishes this reveals their ethical standards to which they adhere to. This paper will discuss the financial practices, ethical standards, and

10.  When does risk of loss pass in a sale of goods that does not involve a common carrier or a bailment?

Revenue determination is an important tool for health care organizations because it allows for efficient management of payment systems. This paper will look at the different components that form the payment-determination bases of revenue determination. Moreover, the difference between specific and bundled service payments will be discussed. Lastly, the three ways health care providers control their revenue function will be highlighted.

The boards proposed a standard by which revenue would be recognized entirely based on the firm’s contract with the customer. Any remaining rights or obligations in the contract would give rise to net contract assets or net contract liabilities. Under the proposal, revenue would be recognized based on the changes in rights and obligations under a contract entered into with a customer. Rights (assets) arise from a customer’s promise of cash or other compensation while obligations (liabilities) arise from the firm’s promise to transfer assets to the customer. Revenue is recognized whenever there is an increase in contractual assets or a decrease in contractual liabilities or a combination of both. Remaining rights under the contract are measured, the balance of which will create a net contract asset or a net contract liability.

The following report is in response to your request for an authoritative answer regarding revenue recognition when a right of return exists. The authoritative literature that addresses the revenue recognition when right of return exists is the FASB codification. More specifically, the section regarding revenue recognition of products. This section discusses the necessary conditions for recognizing revenue when a right of return exists and the factors that may impair the ability to make a reasonable estimate of the amount of future returns. (FASB ASC 605-15-25)

According to Kimmel, Kieso and Waygandt (2011), "the revenue recognition principle requires that companies recognize revenue in the accounting period in which it is earned." Basically, this means that revenues should be recognized (or in other words recorded) on completion of the process of revenue generation i.e. once revenue has been earned. This is as per the accrual basis of accounting. Essentially, revenue recognition derives its significance from its utilization when it comes to the determination of the specific accounting period in which earnings should be recorded.

The SAB 104 is a revised of Revenue Recognition of the SAB 101. There are five steps to achieve the core principle of SAB 104. First, identify the contract with a customer, identify the seller’s obligations. SAB 104 didn’t provide specific guidance on persuasive forms of evidence, but it could be written contract, sale receipt, or other forms of written or electronic evidence. Second, identify the performance obligations (promises) in the contract. Third, determine the transaction price. Fourth, allocate the transaction price to the performance obligations in the contract. Lastly, recognize revenue when (or as) the reporting organization satisfies a performance obligation. Entity should facilitate assessment of whether the obligation undertaken by the seller has been completed. There are two models on the revenue recognition base on delivery. The completed performance (immediate recognition) in which a single point in time when the seller performs obligation and buyer receives benefit. The Proportional performance (recognition over performance period) is when the seller performs and customer receives value over time. Examples of SAB 104 Revenue Recognition Delivery are advertising revenue or subscription for annual membership where cash is collected upfront. SAB 104 doesn’t have specific guidelines for Revenue recognition’s determination of collectability as long as whether the revenue is realizable. For examples, payment history, credit checks, early cancellation provisions. If collectability is not reasonably assured, revenue received from the transaction should not be recognized upon receipt of cash. Although in the old principal (SAB No.101) doesn’t have to be followed by steps like the new principal (SAB No. 104), but they are very

Revenue recognition is considered to be the flipside of the cookies jar. Where through revenue or expense recognition it can lead to have inflated financial statement. Which simply means that if a company dabbled with earnings management then they have to inflate revenue in next period more , because they need to makeup for the shortfall they had in the previous period an so on . this technique will be a never ending one cause it will be ongoing and non stop where they try to cover up the things they have made. Examples for it creating false revenue, changing time in recognizing revenue: early revenue recognition or deferred

The accounting practices at Carlton normally permit revenue recognition after the shipment of the computer systems. Peale, Gower and Quill, Carlton’s auditors, are worried about the accounting practices regarding revenue recognition of certain transactions during the

Timing of revenue recognition is a crucial part in revenue recognition. According to US GAAP, revenue should be recognized when it is realized/realizable and earned (FASB, 1984, Para. 83).

This assignment features the recognition and measurement of revenue depending on the source of revenue in accordance with the provisions of International Accounting Standards (IAS) 18 Revenue.