What is bill and hold transaction? Can revenue ever be recognized if such an arrangement exists? Ans: Bill and hold transactions are those transactions that occur when a company invoices its customer, but has not yet shipped the products. The revenue recognition is appropriate when the products are delivered assuming the seller had no rights or risks associated with the products once they were
First, according to the ASC 605-25-25-6, “a delivered item or items that do not qualify as a separate unit of accounting within the arrangement shall be determined for those combined deliverables as a single unit of accounting.” If the Power starterpack is not a separate deliverable, it shall be considered as a single unit of accounting, which is not a separate unit of accounting. Power starterpack is sold as a bundle, and only one stream of revenue. That means the activation card has to be sold as combination with service, and only recognize $200 as revenue. 2. The activation card is a separate deliverable and a separate unit of accounting.
For customers who purchase virtual goods, they would not consume it immediately. Not until they fully consumed these virtual goods, they would not purchase any other new products. Therefore, it is very reasonable for companies like Zynaga to record revenue based on its estimated life. 1. What is Staples fiscal year-end?
12.6. Create a questionnaire checklist that can be used to evaluate controls for each of the four basic activities in the revenue cycle (sales order entry, shipping, billing, and cash collections). A.) For each control issue, write a Yes/No question such that a “No” answer represents a control weakness. For example, one question might be, “Are customer credit limits set and modified by a credit manager with no sales responsibility?” B.)
It does not reflect the substance of the transaction, though, which is that PDL has rendered multiple deliverables in sale: both the initial sale, and the subsequent sale based on points value are being sold. Accordingly, PDL must consider an alternate approach to its loyalty point program: On a sale that involves issuance of points, some of the sale value is assigned to current sales, but the retail value of points to be redeemed in the future is recorded as
Under the terms of the research and development agreement, SolvGen retains all intellectual rights to the results of the research and development agreement (even in the event of default by the Company). In connection with this agreement, SolvGen is entitled to the following nonrefundable milestone payments from Careway: 1. Exclusive negotiation payment —$1 million (paid December 1, 2009). 2. Contract signing payment —$2 million (paid January 1, 2010).
Currently, Teletech employs a single corporate hurdle rate to all project proposals without consideration of the divisional segment from which it originates. However, this policy may distort the risk/return evaluation of investment opportunities. Since it is critical that management has
Answer Key for Seligram, Inc. page 1 1. What business decisions at Seligram does the cost system support? In this context, what caused the existing cost system at Seligram (ETO) to fail? In general, a cost system supports the pricing decisions of the firm. ETO’s existing cost system contains only one cost center (the entire facility).
The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. © 2011 by Jonathan Gruber. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. The Impacts of the Affordable Care Act: How Reasonable Are the Projections?
Direct Drugs Inc. (Direct) is planning to acquire SolvGen Inc. (SolvGen or the Company), a publicly owned company, during the fourth quarter of fiscal year ending December 31, 2012. Direct has engaged our audit engagement team to perform due diligence procedures, with an emphasis on the review of two separate material agreements: (1) a research and development agreement and (2) a license and distribution agreement, both executed by SolvGen during the first quarter of fiscal year 2012. Direct’s management provided the engagement team with the following memo describing the Company’s revenue recognition policy: MEMO To: Audit Engagement Team From: CFO, SolvGen Inc. Subject: Revenue Recognition for Research and Development and License and Distribution Agreements Date: November 30, 2012 SolvGen Inc. (the Company), an SEC registrant, is a pharmaceutical development company. SolvGen entered into a five-year research and development agreement with Careway Pharma Inc. (Careway) on January 1, 2012. The research and development agreement calls for SolvGen to use its best efforts to further develop proprietary instrument systems that have been under development for nearly 18 months and are expected to be ready for commercial launch in the near future.