Wareham Sc Systems Executive Summary

1265 Words6 Pages
Wareham SC Systems, Inc. is a “capital equipment and testing instrument manufacturer and supplier comprised to a variety of highly cynical electronics-based industries” (Anthony, Hawkins, & Merchant, 2010, p. 137). Wareham SC Systems, Inc. is comprised of three divisions, Glendale Division, Advanced Technology Division, and Technical Devices Division. Glendale Division is an equipment manufacturer that is sold in a standard model. Advanced Technology Division is also a manufacturer of equipment however they develop and manufacture complex equipment. Technical Devices Division is also a manufacturer however they specialize in “electrical, electronic and mechanical testing devices” and market their product to distributors as well as direct sales to high-volume customers. Soma Desai, Chief Financial Officer at Wareham SC Systems, Inc. conducted a review of all three divisions’ revenue recognition practices in preparation of reporting third quarter’s Security and Exchange Commission’s (SEC) Form Q-10 filing. The SEC recently implemented reporting guidelines for revenue recognition as indicated in SAB101. According to SAB101 revenue should be recognized “when earned and realized or realizable” and must meet the following criteria: “persuasive evidence of an order arrangement exists, delivery of the ordered good has occurred or service has been rendered, the seller’s price to the buyer is fixed or determinable, and collectability of the sale proceeds is reasonably assured” (Anthony, Hawkins, & Merchant, 2010, p. 137). Wareham SC Systems, Inc.’s revenue recognition policy states that revenue for products will be recognized upon shipment. Since most products come with a warranty, the warranty is realized at the time revenue is recognized. Revenue recognition for service occurs at the time of the service or over the length of the service contract.

More about Wareham Sc Systems Executive Summary

Open Document