If no service contract exists, those fees are recognized over the average customer relationship period. Associated expenses are deferred only to the extent of such deferred revenue. For contracts that involve the bundling of services, revenue is allocated to the services based on their relative fair value. AT&T Inc. records the sale of equipment to customers as gross revenue when AT&T Inc. is the primary obligor in the arrangement, when title is passed and when the products are accepted by customers. For agreements involving the resale of third-party services in which AT&T Inc. is not considered the primary obligor of the arrangement, AT&T Inc. records the revenue net of the associated costs incurred.
Grace Amankwe Compliance Project – Part II ACC 655 Zumiez Inc. Analysis of Compliance Zumiez Inc. recognizes revenue of in store sales at the time of purchase and recognizes revenue of online sales upon estimated delivery to their customer and shipping revenues are within net sales reported. Taxes collected from their customers are recorded on a net basis and the sale of a gift card is recorded as a current liability and then recognized as revenue when the customer redeems the gift card. Revenue is recorded net of estimated and actual sales returns and deductions for promotions. Zumiez Inc. also accrues for estimated sales returns by customers based on historical sales return results.
Decision Making Accounting (ACC) 561 November 11, 2010 Eddie Mattison, Facilitator Decision Making Budgets and Performance Reports “Budgets…help to coordinate and implement plans. They are the chief devices for disciplining management planning. Without budgets, planning may not get the front and center focus that it usually deserves.” (Horngren at el. 2008, p. 13) Guillermo must be able to operate within his budgets; otherwise he may begin to operate at a profit loss. Creating a budget will allow Guillermo to know the exact amount of money that he has to allocate to specific expenses.
This is putting your action points from the Decide stage into action to achieve the goals laid out in the assess stage – whether it is shopping around for the best value financial products, or looking for ways to increase your income. The Review Stage is essential, and
By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold. Requirement 2 - A Generally, the lower of cost or market method is used to value inventory in order to “avoid reporting inventory at an amount greater than the benefits it can provide” (Spiceland, Sepe, & Nelson, 2013, p. 476). According to Spiceland, Sepe, and Nelson (2013) the “change in replacement cost usually is a good indicator of the direction of change in selling price” (p. 477). When the change in replacement cost is negative the LCM method allows companies to apply the conservatism principle. The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle).
Analysis of Issue On what basis did Medicis initially justify the use of replacement cost to estimate returns? Why is it valid or invalid? Medicis justified the use of replacement to estimate returns using ASC 605-15-15-2 (Revenue Recognition - Products – Scope and Scope Exceptions) which states including: 15-2 (a). [E]xchanges by ultimate customers of one item for another of the same kind, quality, and price (for example, one color or size for another) are not considered returns for purposes of this Subtopic. E&Y reasoned this as it creates an exception to the general rule of reserving for expected future product returns at the gross sales price and deferring the recognition of an equal amount of revenue.
For these reasons, it is necessary to analyze the competitive advantage of the different options presented. • Strengths and Opportunities: The project evaluation should consider a SWOT analysis of each potential application, which allows identifying the strengths, opportunities, threats and weaknesses. This way, it is possible to choose the best option, which maximized the firm’s strengths and opportunities, while mitigating its threats and weaknesses. • Barrier to Entry: Also it is necessary to analyze the cost of enter to the industry. • Economic Benefit: What will be the earnings associated to the project.. • Customer Preferences Bernstein should recommend to the board the
These are the main examples of capital outlay. When Caledonia Products are calculated accurately, it illustrates the financial wealth of the company. While reviewing the company’s cash flow, it appears that Caledonia is reaching their financial planning goals. The initial outlay is $3,956,000.00 in year 1; $7,432,000 in year 2; $10,300,000 in year 3; $8,056,000 in year 4; $5,680,000 in year 5. Therefore, through years one through five, Caledonia has an initial outlay of
Developing a strategic business plan to manage capital and human resources is quintessential to escaping some of the potential pitfalls. In addition, creating pro forma financial statements to determine the assets necessary for business operations, and to
6. What are some evaluative criteria for supporting the decision? * Scores on consumer’s response with respect to pricing. * The Expected Revenue generated from the sales of tickets and concessions. * Determining the Expenses and Income to Break