1. Is the Power Starterpack a multiple-element arrangement? According to ASC 605-25-05-1, a multiple-element arrangement is one in which a company "will perform multiple revenue-generating activities." In such an arrangement, a company provides multiple products or services, usually under a single contract. Often, a company will "transfer [those] deliverables to the customer and performance may occur at different times or over different periods of time" (ASC 605-25-05-2). Given these complexities
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This is because according to the provisions of the statement of position No. 97 - 2, software revenue recognition a four part conjunctive test must be attained. One of the elements of this conju n ctive test is the compulsory exist ence of persuasive evidence. This is in regard to paragraph 17 which states that even if all other requirements for revenue recognition are met, revenue should be recognized as persuasive evidence of an arrangement exists. In the case of upstream
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method would be most like the typical revenue recognition method at point of product delivery. The names of the students are Bill and John. Bill believes that the completed -contract method is most like recognizing revenue at point of delivery because in the end the final product is delivered and has fulfilled any requirements to recognize revenue. John believes that percentage-of-completion is most like point of delivery and this allows a company to recognize revenue over time. I support Bill’s opinion
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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
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Background on Coconut Telegraph Coconut Telegraph Corporation (Coconut) is a developer and provider of specialized customer billings and management software and systems. On February 1, 2012, Coconut entered into an arrangement with Buffett Worldwide Inc. (Buffett) to deliver the Volcano System and provide one year of post contract customer support (PCS) beginning March 1, 2012. Buffett paid $12,000 on February 1, 2012, for the Volcano System and the related PCS. On May 1, 2012, and in a separate
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The revenue recognition principle is a cornerstone of accrual accounting together with matching principle. They both determine the accounting period, in which revenues and expenses are recognized. According to the principle, revenues are recognized when they are realised or realisable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting – in contrast – revenues are recognized when cash is received no matter when goods or services
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© 2000 American Accounting Association Accounting Horizons Vol. 14 No. 2 June 2000 pp. 235-250 Earnings Management: Reconciling the Views of Accounting Academics, Practitioners, and Regulators Patricia M. Dechow and Douglas J. Skinner Patricia M. Dechow is an Associate Professor and Douglas J. Skinner is a Professor, both at the University of Michigan. SYNOPSIS: We address the fact that accounting academics often have very different perceptions of earnings management than do practitioners
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Apple, in this case, uses non-GAAP measures because they believe that these measures, when taken together with the consolidated GAAP measures, provide incremental comprehension into the core factors affecting the company’s performance and future revenue potential. They believe this method increases the transparency of the current results, thus reflecting a better economic reality, and allowing investors to fully understand the trends in its current and future performance. While subscription accounting
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Professor Paul Zarowin - NYU Stern School of Business Financial Reporting and Analysis - B10.2302/C10.0021 - Class Notes Revenue Recognition - Special Issues In most cases, revenue recognition is straightforward. Revenue is recognized when two conditions are met: (1) it is earned (i.e., performance is complete), and (2) cash collection is (reasonably) assured. RCJ (pg. 46) refer to these as the critical event and the measurable conditions, respectively. In this module we will discuss
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purchasor. The software has never been sold without Laser for its functional necessity. In this memo, as explained below, we conclude that: 1. Eye Vision’s arrangement with Holland Hospital is not within the scope of ASC 985-605, Software: Revenue Recognition. 2. The deliverables in this arrangement are the Clear View Laser, embedded software, and maintenance plan, respectively. 3. The Clear View Laser together with embedded software and maintenance plan will be accounted for as separate units
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