Issue 1(FASB ASC 230-10-50)
Some transactions are part cash and noncash; only the cash portion shall be reported in the statement of cash flows. Non-cash activities are reported in the footnotes of the cash flow statement or reported parenthetically MEMO:
After researching the proper treatment of this transaction in relation to cash flows, I found the following information:
• The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments.
With this being said, only the cash portion of this transaction should be reported in the statement of cash flows. Non-cash activities are reported in the footnotes of the cash flow statement or parenthetically within the statement. Therefore, the other part of this transaction (notes payable) would be reported this way. Issue 2(FASB ASC 605-10-25,605-15-25) Revenue is generally not recognized until realized or realizable. Revenue is realized when products, merchandise, or other assets are exchanged for cash or claims to cash. Revenue can only be recognized when the earnings process is complete and there is reasonable certainty to collection.
MEMO:
Trade Loading, which is also known as channel stuffing is a practice where a company inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large. This is practiced to boost sales, however, it shouldn’t be recognized as revenue. Revenue is recognized when it is realized or realizable. This occurs when assets are exchanged for cash or claims to cash. Revenue can be recognized once the earnings process is complete and there is certainty that collection will ensue. The practice of channel stuffing uses revenues and earnings from the future because overstocked customers will reduce orders in future periods. Since customers will be likely to return