ISSUES IN ACCOUNTING EDUCATION Vol. 26, No. 3 2011 pp. 609–618 American Accounting Association DOI: 10.2308/iace-50029 A Series of Revenue Recognition Research Cases Using the Codification R. Mark Alford, Teresa M. DiMattia, Nancy T. Hill, and Kevin T. Stevens ABSTRACT: This series of four short cases is designed to help students develop the skills to research the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification and other authoritative literature. It also is
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theme Revenue Recognition R evenue is usually the largest single item in financial statements, and the issues involving revenue recognition are among the most important and difficult ones that standardsetters and accountants face. In recent years, concerns related to the recognition of revenue in accordance with Accounting Standards have heightened significantly. Quite often, companies end up tweaking the Revenue numbers, besides some other reasons. Recording revenue improperly is also a
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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
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General Instructions There are ten cases included in this packet (Cases #1 through #9). You are responsible for reading all nine cases prior to class on Monday, October 7th. In addition, your group is responsible for informally presenting the solution to one case on that date. The case assigned to each group corresponds to your group number. Your presentation should take the form of “teaching” the rest of the class the material related to the case. Keep in mind that for exam purposes all groups
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immediate feedback about how well they are doing. For example, management usually wants monthly reports on financial results, most large corporations are required to present quarterly and annual financial statements to stockholders, and the Internal Revenue Service requires all businesses to file annual tax returns. Many business transactions affect more than one of these arbitrary time periods. For example, a new building purchased by Bank of America or a new airplane purchased by Southwest Airlines
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1. Is Eye Vision’s arrangement with Holland Hospital within the scope of ASC 985-605, Software: Revenue Recognition? In this case, the main content of the Eye Vision’s arrangement with Holland Hospital include embedded software medical equipment and an initial option to purchase a two-year separately priced maintenance agreement. In this case, because “Eye Vision has never sold, nor does it offer to sell, the Clear View Laser without the embedded software because the software is necessary to perform
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Revenue Recognition: Converge between U.S. GAAP and IFRS While the basic revenue recognition model under US GAAP and IFRS share some similarities, if we make a comparison under two systems, we may find quite a few differences. In general, IFRS has much less industry-specific guidance than does US GAAP. First, one of the main differences lies in timing of revenue recognition with respect to contracts criteria such as long-term construction or contingency. According to US GAAP, revenue must be realized
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Codifications and quotations used in following scenarios 1) Service revenue should be recognized on a straight-line basis, unless evidence suggests that the revenue is earned or obligations are fulfilled in a different pattern, over the contractual term of the arrangement or the expected period during which those specified services will be performed, whichever is longer. (SAB Topic 13A3, Interpretive Response to ques.6) 2) Revenue should be deferred until the specifications have been achieved or
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1. Membership revenue should be recognized when the membership fee is collected. Here Baber should use the earnings based approach. For memberships using a prepaid approach, they have not earned the revenue paid at the beginning of each term although they have collected the funds. Recognizing revenue at this point is against financial reporting best practices as there is uncertainty about whether or not the buyer will demand a refund at any given time. It falsely inflates revenue at present and
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To: Bruce Darling From: Jordyn Peterson Date: October 28, 2014 Subject: Revenue Recognition The SEC provides criteria to help assess risks for the timing of revenue recognition. Recognizing revenue can be difficult to decide so auditors refer to the provided guidance to apply the concept that revenue should not be recognized until it is realized or is realizable and earned. The criteria to help decide when revenue should be recognized includes: * Pervasive evidence of an arrangement exists
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