Revenue Recognition Case

Revenue Recognition Case Revenue deferred payment is one of the just about common issues that an auditor faces when working with companies. This is due to the differences in the products and operate offered from companies to their customers. For example, revenue recognition for physical items is different than offered run where the party might be obligated to follow up on customers needs in a upcoming date. a- According to the US Securities and Exchange Commission (SEC), there ar general criteria on revenue recognition that companies need to follow. Auditors prank is to confirm that companies argon following the guidelines when they review the financial statements of companies crossways the nation. The following criteria must be met with regard to revenue recognition: * Persuasive evidence of an arrangement exists. * Delivery has occurred or profits have been rendered. * The sellers price to the buyer is stock-still or determinable * Collectability is reasonably assured. These are general statement and from each one case may need to be analyzed notwithstanding as there are many guidelines to follow beneath these statements.

b- Revenue Recognition Scenarios : 1- With the AOL scenario, it is important to note that this is a bundled service which includes the contract and the internet service. The internet service can not be operated without the contract and therefore according to SAB-101 the delivery of an case-by-case element is considered not to have occurred if there are undelivered elements that are essential to the functionality of the delivered element because the customer does not have the rich use of the delivered element. Therefore, it is not allowed to recognize 30% of the contract direct since no service have been rendered at the time. There should besides be additional information to note as for the precipitate and cancelation of service policies to consider. Therefore, the company should only recognize the monthly $19.95 later on the service have been... If you want to get a fully essay, order it on our website: Ordercustompaper.com

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