subsequent cash receipts are included in income. The cost recovery method is used when the uncertainty of collection of the sales price is so great that even use of the installment method cannot be justified. Under the cost recovery method‚ both revenues and cost of sales are recognized at the point of sale‚ but the related gross profit is deferred until all costs of sales have been recovered. Each installment must also be divided between principal and interest‚ but unlike the installment method
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determines income by subtracting expenses from revenues. As simple as this may seem‚ there are many complexities that arise when trying to implement this concept. For example‚ there are many activities and events that must take place to generate revenues. The accountant adopts the procedure of recognizing revenues at the time a certain critical event takes place. The sales (or accrual) basis is the most widely used method for recognizing revenues. Revenues are assumed to be earned at the time the sale
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Revenue Recognition: IFRS and FASB Convergence With the growth of international business there is a need to standardize financial statements globally. Presently there are “approximately 120 foreign private issuers currently that report to the Commission using IFRS financial statements.” By standardizing accounting practices investors will be able to make informed decisions based on comparability and accuracy of financial statements. The SEC released this statement in 2008‚ “We believe that
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Wrong Number: Telecom Tricks The telecommunications industry had its own bizarre take on revenue recognition during the boom. From 1997 to 2000‚ Global Crossing took on over $7 billion of debt to lay 1.7 million miles of fiber-optic cable to transport data via the Internet. When completed in summer 2001‚ the network spanned 27 countries and 200 major cities around the globe. The company’s debt load didn’t seem to faze investors—Global Crossing’s market capitalization reached $40 billion in 1999
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GAIT ANALYSIS AND RECOGNITION TECHNIQUES Gait analysis is the systematic study of animal locomotion‚ more specifically the study of human motion‚ using the eye and the brain of observers‚ augmented by instrumentation for measuring body movements‚ body mechanics‚ and the activity of the muscles. Gait analysis is used to assess‚ plan‚ and treat individuals with conditions affecting their ability to walk. It is also commonly used in sports biomechanics to help athletes run more efficiently and to identify
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Tricky twosome P.B. Nageshwar What happens when a merged entity is left with two marketing managers or two sales heads? A case in point is the Alcatel-Lucent merger. During the merger‚ the smooth settlement of HR issues was on top of the agenda for both companies. They decided to deal with both pre-merger and post-merger integration issues by holding a series of meetings between the top HR executives at the two companies. Issues such as salaries and benefits‚ designations‚ and other sensitive
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Innovations of Lucent VoIP Technologies-Final Course Project TM583 1.0 Strategy (TCO F) 2 Organization name: 2 Strategy Statement 2 2.0 Core Competencies (TCO C) 3 3.0 Industry Dynamics (TCO A) 5 4.0 Technology Sourcing and Internal Innovation (TCO D) 6 5.0 Product Development
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correct decision about the revenue for the period. The percentage of completion method refers to the income earned by the contractor determined on the basis of progress of the contract. Under this method‚ current assets may include costs and recognized income not yet billed with respect to certain contracts. This method is most commonly used in the construction industry‚ where very long-term construction projects would otherwise keep a company from revealing any revenues or expenses on its financial
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Recently in June 2010‚ the International Accounting Standards Board and the Financial Accounting Standard Board initiated a joint project and released an exposure draft named Revenue from Contracts with Customers. This exposure draft emphasizes the status of revenue in assessing financial statements and states that revenue is conclusive in assessing a company’s operating situation and developing prospects. This statement has a profound influence on accounting industry and has lead to a wide range
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Issues With Revenue Recognition within the Software Industry The Isoft Example Financial Controller-SoftWarehouse Ltd This report has been prepared for the Board of Directors of SoftWarehouse Ltd for elucidation about the contentious issues that have given rise to the publication of the article concerning Isoft’s issues with revenue recognition. Finally‚ it will also assess whether or not these issues are likely to affect SoftWarehouse Ltd. TABLE OF CONTENTS Executive Summary: 3
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