The current policy incorrectly recognizes revenues too early which may cause revenues for the upcoming period to become overstated.
The Glendale Division manufactures equipment that is generally sold in a standard model. Not only does this defy the General Accepted Accounting Principles but is does not satisfy the criteria requiring them to provide persuasive evidence that an arrangement order exists.
The situation with Cataumet Devices is a bit similar due to the fact that half of the sales agreement has been achieved. Furthermore, the 90 day warranty provision creates an uncertainty in the collectibility of sales proceeds. Payment is due 30 days after customer acceptance and title is passed to customers upon delivery.
However, if a claim arose, the customer could either request a full refund, a replacement unit or require the division to repair the equipment according to the customers requirements.
As far as the cost of installation services goes, we cannot recognize this cost until the price has been determined. Text and Cases 13th ed. The advance technology division manufactures, develops, and sells specialized manufacturing equipment to include installation services which is sold on a time and materials basis.
Due to high development and manufacturing costs, these factors increases the risk that the company will take a significant loss in revenue if the product is rejected. This contract also provides customer acceptance provision that grants Sandham a full refund if the product was not accepted within days.
The final industry, Ashaban Industries is a risky customer, but since we have delivered the goods and they have accepted the 2 million dollar account, we can go ahead and recognized the revenue upon payment of goods. Distributors were also asked to increase their inventory from a few weeks worth to two years worth.
Under their sales contract, customer acceptance is recognized after the customer received and tested the equipment which would then follow a formal sign-off or the passage of 90 days without a claim. The Technical Devices Division has decided to change its sales strategy.
This will take place once the product has been completely installed. The sales contract with Sandham Inc.
Our division can only recognize the payments they receive as revenue. All other payments that are outstanding cannot be recognized yet. When looking at the scenario with Onsetcom Incorporated, revenue can be recognized when our product has been delivered because the customer acceptance clause has been fulfilled.
The customer acceptance clause stated that the equipment needed to meet the divisions published specifications prior to shipment, which is what we have determined at our facility. Title is also passed upon delivery.Executive Summary Revenue Recognition and Wareham Sc Systems, Inc.
Biovail Case Explain how continuous improvement models, knowledge management systems, quality systems and sustainability principles can be incorporated into business systems. Wareham SC Systems current revenue recognition policy states that they recognize revenue when they have shipped their product to the customer.
SC Systems also adjusts for warranty by estimating how much money will be spent on fulfilling those warranties. EXECUTIVE SUMMARY Revenue Recognition and Wareham SC Systems, Inc - Executive Summary Revenue Recognition and Wareham Sc Systems, Inc.
introduction. Wareham SC Systems, Inc. is a capital equipment and testing instrument manufacturer and supplier comprised of three divisions: the Glendale Division, the. EXECUTIVE SUMMARY Revenue Recognition and Wareham SC Systems, Inc. Wareham SC Systems, Inc. is a capital equipment and testing instrument manufacturer and supplier comprised of three divisions: the Glendale Division, the Advanced Technology Division and the Technical Devices Division (Anthony, Hawkins, &.
Executive Summary of "Revenue Recognition, Earnings Management, and Earnings Informativeness in the Semiconductor Industry" by Stephanie J. Rasmussen. revealed the recognition of most revenue streams had not changed significantly when compared to similar data from current guidance.
Public companies’ recent quarterly and .Download