investigation by the Securities and Exchange Commission (SEC) for certain accounting practices, this case explores the Microsoft’s financial reporting strategy related to two policies through two accounting issues – software capitalization and revenue recognition. Analyzing the performance of its stock, annual income statement, balance sheets, cash flow and some other data, the company was found that it selects relatively conservative accounting methods. In addition, it discusses the issue of managing
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We have more understanding why it is important to recognize revenues and the different revenues that an accountant has to look for. It is very important to know this because as an accountant we will be accountable for any discrepancy. I also learned more about GAAP and how the rules apply to accounting. Some of us are still kind of confused of GAAP, but reading more about gives deeper understanding. Not following the rules and regulations of GAAP will cost your license and possible jail time. Some
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Running head: REVENUE RECOGNITION Revenue Recognition Name: Institution: Course: Tutor: Date: Revenue Recognition Introduction In accounting for revenues an accountant must follow GAAPS guidelines on accounting for revenues. Joy fitness is currently faced with a problem of earning low revenue and wants to seek for a business loan. It is an important requirement for any business to submit all their financial transaction to the financial
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Financial Accounting Standards Board ORIGINAL PRONOUNCEMENTS AS AMENDED Statement of Financial Accounting Concepts No. 5 Recognition and Measurement in Financial Statements of Business Enterprises Copyright © 2008 by Financial Accounting Standards Board. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission
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| | Revenues | Expenses | Net Income | January 1, 2010: | | | | | | | | | | Deliver iPhone to the customer | +500 (Cash) | | +500 (Deferred Revenue) | | | | | | | Remove iPhone from delivery | -350 (Inventory)+350 (Deferred Costs) | | | | | | | | | Total Impact on January 1, 2010 | +500 | | +500 | | | | | | | | | | | | | | | | | December 31, 2010: | | | | | | | | | | Recognize revenue of one year | | | -250 (Deferred Revenue) | |
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Chapter 5 Income Measurement and Profitability Analysis exercises Exercise 5-1 Requirement 1 Year Income recognized 2011. $250,000 ($400,000 - 150,000) 2012. – 0 – 2013. – 0 – 2014. – 0 – 2015. – 0 – Total $250,000 Requirement 2 | | | | | |Year |Cash Collected |Cost Recovery(37.5%)
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delivered at the NYU Center for Law and Business regarding earnings management in 1998. While companies use many techniques and illusions to improve their numbers, this paper will only look at three: “Cookie-Jar” Reserves, “Big Bath” Charges, and Revenue Recognition. After discussing and using real world examples of these techniques, this paper will examine ethical questions related to the selection of audit committee members such as qualifications and independence. Cookie Jar Reserves Cookie Jar reserves
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Issues With Revenue Recognition within the Software Industry The Isoft Example Financial Controller-SoftWarehouse Ltd This report has been prepared for the Board of Directors of SoftWarehouse Ltd for elucidation about the contentious issues that have given rise to the publication of the article concerning Isoft’s issues with revenue recognition. Finally, it will also assess whether or not these issues are likely to affect SoftWarehouse Ltd. TABLE OF CONTENTS Executive Summary: 3 Introduction:
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recognize revenue at the point of sale based upon the time of shipment because the books are sold f.o.b. shipping point. Because of the return policy one might argue in favor of the cash collection basis. Because the returns can be estimated, one could argue for shipping point less estimated returns. (b) Based on the available information and lack of any information indicating that any of the criteria in FASB Statement No. 48 were not met, the correct treatment is to report revenue at the time
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is doubtful, revenue may be recognized as cash is received instead of accruing revenues. As a lease, the purchase of the fractional interest in the airplane would not imply ownership. It would simply be considered prepaid rent or an advance lease payment. It should therefore be recognized in periodic installments over the period of the lease. This way, if the lessee decides to terminate the contract, it will be easier to calculate how much he is due back and how much of the revenue should be allocated
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