Revenue Recognition: Case Study on Caltron Computers‚ Inc. Julie Mong April 17 ‚ 2010 1. In general‚ evaluate Caltron’s revenue recognition policy and the quality of Caltron’s earnings. Caltron Computers‚ Inc.‚ a computer hardware company‚ is publicly held with market capitalization amounting to over $450 million. Carlton’s system designs enable their mini-computer systems to measure up to the power of mainframes with small cost outlays. The accounting practices
Premium Generally Accepted Accounting Principles Customer Financial Accounting Standards Board
Oscar J. "Revenue recognition convergence: The contract-based model." Journal Of Corporate Accounting & Finance (Wiley) 22‚ no. 6 (2011): 87-92. The article “Revenue Recognition Convergence: The Contract-Based Model” is all about revenue recognition. It begins by explaining the conceptual background information to give you an overview of what revenue recognition is both in the US and internationally. Part of this section also discusses what problems have been found with revenue recognition. Because
Premium Explanation International Financial Reporting Standards Understanding
Executive Summary Biovail Corporation‚ a major Canadian pharmaceutical company listed on the New York Stock Exchange‚ announces that it will miss its quarterly earnings target by $25 to $45 million‚ blaming $10 to $15 million of the shortfall on a truck accident involving a shipment that left its facility on the last day of the quarter. The case was ultimately prosecuted by the U.S. Securities and Exchange Commission (SEC). The case is centered on the question of revenue recognition and how the company
Premium Financial statements Generally Accepted Accounting Principles Internal control
Handout Cases on Revenue Recognition CASE 1 The Sea-Soft Water Company distributes its water softeners to dealers upon their request. The contract agreement with the dealers is that they may have 90 days to sell and pay for the softeners. Until the 90-day period is over‚ any softeners may be returned at the dealer’s expense and with no further obligations on the dealer’s part. If the water softeners are damaged while in the hands of a dealer‚ Sea-Soft agrees to accept the return of the
Premium Credit card Contract Payment
Methods of Revenue Recognition 1. The Accrual Method of Revenue Recognition The most common revenue recognition system is based on the accrual method. Under this approach‚ if the revenue recognition rules presented in the last section have been met‚ then revenue may be recognized in full. In addition‚ expenses related to that revenue‚ even if supplier invoices have not yet been received should be recognized and matched against the revenue. The name of this method does not imply that the revenue
Premium Generally Accepted Accounting Principles Construction Project
#1-E) Experience with Revenue Recognition--- Do you have any experience related to revenue recognition? Surely‚ I do #2-Please read the financial statement analysis case (Merck & Johnson & Johnson) on page 613‚ Chapter 12. Please read the instructions for (a)‚ (b)‚ and (c) and address the three questions that are asked. Case Merck & Johnson & Johnson are two leaders producers of health care products. Each has considerable assets‚ and each expends considerable funds each year toward the development
Premium Generally Accepted Accounting Principles Income Balance sheet
Biovail Case Part 1: Assumptions: 1. The mark-up is from the Distributor to the Wholesaler‚ and the margin is from the Wholesaler to the Retailer Biovail Distributor purchase price Wholesaler purchase price = Distributor purchase price + 400% mark-up Retailer price = Wholesaler price + 35% margin 2. We don’t know the excess space needed in the truck for the 64 gallon drums so we assumed that the 1.00 cm3 accounts for the excess space
Premium Marketing Commercial item transport and distribution Cargo
tablets fit into a trailer 1.5x=191‚250‚000 X=127‚500‚000 d. How much revenue does Biovail get from a single pill ? 400% 35% $2.83 Biovail → Distributor → Wholesaler → Retailer 0.52 ← 2.10 / 400% ← 2.83/1.35%=2.10 127‚500‚000 x 0.52= $6‚630‚000 One truck can definately carry $10 million worth of Wellbutrin XL tablet product. 2. How should the company recognize revenue based upon the two possible FOB contract structures mentioned in the case? Since Biovail’s stock is publically
Premium Generally Accepted Accounting Principles Income statement Revenue
3.6 Revenue recognition with examples when goods are sold under sale or return There are cases when payments are received prior to events that trigger revenue recognition. In that case‚ cash is debited and the unearned revenue is credited. On the other hand‚ when revenue recognition is triggered before actual payment is received‚ accounts receivable is debited while revenue is credited (“Revenue Recognition Principle‚” 2013). Goods are sold under sale or return when they are “sent by the supplier
Premium Generally Accepted Accounting Principles Balance sheet Income statement
Introduction This assignment features the recognition and measurement of revenue depending on the source of revenue in accordance with the provisions of International Accounting Standards (IAS) 18 Revenue. I researched the topic and defined the special purposes of the assignment: first of all‚ it is important to know the main concepts of IAS 18‚ also to learn the rules by using this particular regulatory framework‚ and to get knowledge about writing the report at all.
Premium International Financial Reporting Standards Financial statements Balance sheet