absent for class on that day, have somebody else in class turn it in or put it in the professor’s mailbox on the 5th floor of the RCB building. No email submissions of the case will be accepted. The two accounting standards pertaining to the case, SAB 101(SEC) and EITF 99-19 (FASB) have been posted on Desire2Learn in the same folder as the case. Students will receive an extra credit of 5 points for filling out a questionnaire about the case at the end of the semester. The Case of Groupon’s Revenue
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Characteristics of Accounting Information FASB Concepts Statement No. 6, Elements of Financial Statements AICPA Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts SEC Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements SEC Staff Accounting Bulletin No. 101B, Second Amendment: Revenue Recognition in Financial Statements SEC Regulation S-X, Rule 5-03, Income Statements 1. Diversity exists regarding whether a company should
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The Anonymous Caller: Recognizing It’s a Fraud and Evaluating What to Do The ethic case study was about an anonymous caller who is the controller of a privately-held, small, start-up company. The company was experiencing a severe cash shortage and was required to present the quarterly financial statements to the local bank, in order to begin receiving funds for the line of credit again. She had concerns that the senior executives of the company provided the local bank with misstated financial statements
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CONTENTS INTRODUCTION 2 ISSUES 3 QUESTION and ANSWER 4 RECOMMENDATION 8 CONCLUSION 10 BIBLIOGRAPHY 11 INTRODUCTION Biovail Corporation was one of the Canada’s largest pharmaceutical publicly traded companies which expert in the development and large scale of manufacturing of pharmaceutical products. Biovail Company engaged activities on enhance formulate of the existing drugs, clinical testing, manufacture and commercial pharmaceutical products and utilized advanced drug delivery
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the return of merchandise can negate benefits of having made a sale, the seller must be able to make reliable estimate of future returns, and the right of return should be specified contractually as expiring on some future date. According to SAB No. 101, revenue is recognized when “persuasive evidence of a sales arrangement exists; delivery of goods occurs through transfer of title and risk and rewards of ownership, the selling price is fixed or determinable and collectability is reasonably assured…”
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Summary Nick O’Brian is a recent college graduate. He began working in the accounting department at his aunt’s software company, O’Brian Software. Nick is going over the financial statements when he recognizes some questionable revenue recognition issues. Nick proceeds to address his concerns with the chief financial officer of the company, Lee Marchetti. Lee explains to Nick how revenue recognition is broken down and that a lot of information and judgment is involved. It is also pointed out that
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period of time. However, this does not apply to the nonrefundable milestone payments from Careway, because they are payments relating to research and development deliverables that are accounted for under the milestone method of revenue recognition. (SAB 101) The milestone payments received to date by SolvGen should be recognized as revenue over the expected period of the related research program. A portion of each milestone payment is recognized when the milestone is achieved based on the percentage
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1. (1) Cookie-jar reserves is accounting practice take reserves against losing in a profitable years, and use this reserves in a loss years to make company in a good condition year to year. (2). The strategy of manipulating a company's income statement to make poor results look even worse. http://www.investopedia.com/terms/b/bigbath.asp (3). According to the FAS 5, first, the asset on the financial statement needs to be impaired, and the liability recorded on the finance statement actually
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Revenue Recognition: Where it Will Take Us By Robert Bloom and Jacob Kamm Financial Executive • SUMMER 2014 FINANCIAL REPORTING Since 2008, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have collaborated on a converged revenue recognition standard. Current U.S. Generally Accepted Accounting Principles (GAAP) standards related to revenue recognition are essentially rules-based, containing over 200 specific requirements related
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Amid inquiry from the SEC, and the Department of Justice, and in the atmosphere of negative press, executives at Polymedica have been forced to publicly address concerns regarding accounting practices of their direct response advertisement. Short sellers began unloading stock, stating that Polymedica was misleading investors with overstated assets and revenue. According to GAAP of expense recognition, all advertising is recorded as expense. To understand these circumstances, it is necessary to
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