revenue based upon the two possible FOB structures mentioned in the case? According to GAAP‚ four conditions must be met in order to recognize revenue: 1. Persuasive evidence of an arrangement exists: although the case does not provide extra information on this aspect‚ it seems clear that there is an ongoing relationship between Biovail and the Distributor and that certainly there was a bill‚ purchase order and/or invoice in order to support this sale. 2. Seller’s price to the buyer is fixed
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Biovail Corporation Issues : 1) The company has the problem with their recognition of the profit Whether they should realize or not the revenue for the third quarter. 2) Issues on the concepts of revenue recognition that have been apply in the company to show their financial results. Whether Biovail Corporation recognize its revenue using FOB shipping point or FOB destination. Suggested Solution 1) FOB Destination shipping term The truck accident had no impact on company’s third quarter
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Biovail Case‚ Question 1 1. How many truckloads of product are actually required to carry $10 million of product? Show your calculations. Given: a. 1 Wellbutrin XL tablet is estimated to be 1.5 cm3 (this includes the packing space) b. A 18-wheeler trailer dimensions are: 17m x 4.5m x 2.5m Since the tablet and the trailer are using different units of measurements we need to convert the trailer dimensions to centimeters before we can calculate the volumes. To convert meters into centimeters
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Table of Contents 1.0 Abstract Biovail Corporation‚ a large pharmaceutical company and had applied advanced drug-delivery technologies to improve the clinical effectiveness of medicines. It is recently had its stock downgraded by a well-known pharmaceutical analyst and a number of other analysts were also scrutinizing the company. The outcome was not favorable‚ as Biovail ’s acquisition methods were labeled as unethical and their accounting practices were questioned
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Assignment Questions: 1. How many truckloads of product are actually required to carry $10 million of product? Show your calculations. Given: a. 1 Wellbutrin XL tablet is estimated to be 1.5 cm3 (this includes the packing space) b. 1 18-wheeler trailer’s dimensions are: 17m x 4.5m x 2.5m Since the tablet and the trailer are using different units of measurements we need to convert the trailer dimensions to centimeters before we can calculate the volumes. a. To convert meters into
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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
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Table of Contents 1.0 INTRODUCTION Biovail Corporation was one of the Canada’s largest pharmaceutical publicly traded companies which expert in the development and large scale of manufacturing of pharmaceutical products. Biovail Company engaged activities on enhance formulate of the existing drugs‚ clinical testing‚ manufacture and commercial pharmaceutical products and utilized advanced drug delivery technologies. In the case‚ on September 30‚ 2003 there was a truck carrying a shipment
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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
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1. How many truckloads of product are actually required to carry $10million of product? Show your calculations 0.028 Truckloads are required. This is derived from $10‚000‚000/$2.83 price per tablet‚ giving approximately 3‚533‚569 tablets. The dimensions of the truckload include 17mx4.5mx2.5m= 191.25m^3‚ or 191‚250‚000 cm^3. The volume each tablet takes up is 1.5cm^3‚ so a truckload can fit 191‚250‚000cm^3/1.5cm^3=127‚500‚000. 3‚533‚569/127‚500‚000=.028 truckloads. 2. How should the company
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| |NO OF TRUCKS REQUIRED FOR TABLETS WORTH 10 MUSD |1 | | | | Q2. Response: Two Possible FOB Contracts 1. FOB Factory or shipping point. The revenue will be
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