necessary journal entries for each year (credit Various Accounts for construction costs incurred). 2011 2012 -200,000 2013 4,000,000 4,050,000 -50,000 Revenue Expense Gross Profit All the journal entries remain the same except for entry 2). 2012 Entry: Loss on Long-term Contracts CIP (loss) 2013 Entry: Construction Expense CIP (loss) Revenue 200,000 200,000 4,050,000 50,000 4,000,000 2. Bounce Computer Corp allows customers to pay in installments for their products. Bounce only had
Exam Question 4 According to FASB webpage, revenue is a crucial number to users of financial statements in assessing a company’s performance and prospects. However, revenue recognition requirements in U.S. GAAP differ from those in IFRS, and both sets of requirements are considered to be in need of improvements. Accordingly, the FASB and the IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would 1)
Impact of the New Revenue Recognition Standard Internship Course Caleb Cartledge 4/11/15 Change is on the horizon and many companies are scrambling trying to figure out how the New Revenue Recognition Standard will impact the way that they conduct business. The prospect of bracing for a game-changing revenue recognition standard at a larger global firm is a daunting task. GE Technical Controller Russell Hodge, CPA, commented about this stating, “I’ll admit to it being a little bit overwhelming to
Financial Accounting Concerns 1. Tokyo AFM recognized premium revenue at the time it received the policyholder’s up-front cash payment. The company’s accountants argued that since the level of up-front payments received from policyholders had been stable over the last few years, this method was an appropriate reflection of economic reality. For example, Fuji Computers entered into a five-year insurance contract with Tokyo AFM against earthquake damage to its headquarters building. As is
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Products or services are transferred when the customer obtains control. The transfer of control to the customer represents the transfer of the rights regarding the products or services. After that, the customer has the right to use the products or services. For each performance obligation, an entity should determine whether the entity satisfies the performance obligation over time by transferring control of a good
Overlook Video Stores Inc. (OVS) To: Ms. Alice Hartford, Partner From: CA, Audit Senior Re: Planning for the year end 2009 of OVS and requested control deficiency information Engagement Overview The purpose of this memo is to document the planning of the financial statement audit st engagement of our client Overlook Video Stores Inc. (OVS) for the year ended December 31 , 2009. OVS has been our client since its inception in 1998. This year’s audit will commence January, 2010, th
INTRODUCTION Revenue recognition is one of the top causes for financial statement restatements. In addition, revenue recognition is an area commonly questioned by the Securities and Exchange Commission (SEC) staff in their review of public filings and resultant comment letter process. Furthermore, revenue recognition is often prey to financial fraud. Coverage of revenue recognition in intermediate accounting courses is typically limited to learning and applying the criteria for revenue recognition outlined
recognized as revenue? A: FASB codification (605-28) milestone method SolvGen Inc. is gonging to use the milestone method to recognize the revenue. The milestone method is a recently issued method of recognizing revenue for research and development arrangements under which consideration to be received by the vendor is contingent upon the achievement of certain milestones(FASB codification (605-28) milestone method). Under the commonly applied milestone method, a vendor recognizes revenue in the
2. Gilmore whistleblowing in the given situation lends itself to much ethical debate. For this discussion, one should assume SCE is in violation of the AICPA Code of Professional Conduct by recognizing revenue in the current period as detailed in the previous issue. To first consider the ethics of Gilmore whistleblowing, it is essential to define the steps that should be taken by her before she considers whistleblowing. For this, one can use the standard on ethical conflicts outlined in the AICPA
CHAPTER 18 REVENUE RECOGNITION MULTIPLE CHOICE—Conceptual AnswerNo.Description c1.Revenue recognition principle. b2.Definition of "realized." a3.Definition of "earned." d4.Recognizing revenue at point of sale. d5.Recording sales when right of return exists. c6.Revenue recognition when right of return exists. d7.Revenue recognition when right of return exists. b8.Appropriate accounting method for long-term contracts. c9.Percentage-of-completion method