it seems that Biovail utilizes an aggressive accounting system‚ together with an insufficient disclosure. In the April 2002‚ Treppel found that the earning quality of Biovail was low and the accounting information was unclear. And the truck accident demonstrates that the top of Biovail did not comply with the GAAP and tended to inflate the revenue. What’s worse‚ after Treppel writing a ‘sell’ recommendation‚ Biovail repudiated its inappropriate accounting by issuing an argument to public. These can
Premium Control theory Ethics Control system
Question one (a) The current revenue recognition policy of Biovail is “Free On Board” (FOB) which states that in which point shipper can transfer the responsibility and the ownership of goods to the buyer. There are two possibilities of FOB. When the contract use “FOB shipping point”‚ the seller has the responsibility for the goods until the goods leave the seller’s dock. Alternatively‚ when the contract uses “FOB destination”‚ before the buyer takes the possession‚ the seller still keeps
Premium Generally Accepted Accounting Principles Revenue Income
concerned about the company’s treatment of analysts who cover the stock? Would you want to be the analyst covering this company?3.0 Causes of the ProblemThe problem arises when Biovail intend to keep their reputation and grading of their stock. Jerry Treppel who was Marris’s predecessor at BAS had downgrade his stock recommendation for Biovail and this resulted
Premium Tram accident Generally Accepted Accounting Principles Chief executive officer
4011 APRIL 7‚ 2009 CRAIG CHAPMAN Biovail Corporation: Revenue Recognition and FOB Sales Accounting Background Late on October 9‚ 2003‚ David Maris‚ an analyst at Banc of America Securities (BAS)‚ was trying to interpret the shocking events of the previous few days and finish the write-up of his first report on the Canadian pharmaceutical firm‚ Biovail Corporation. Maris didn’t like what he saw at the company‚ but he never liked writing “Sell” recommendations. In any event‚ he wanted to make
Premium Income Income statement Revenue
1. How many truckloads of product are actually required to carry $10 million of product? Show your calculations. A) Find the volume of the truck: Interior dimensions of the truck = Interior volume of the truck = = B) Find the manufacturer price (Biovail) for one tablet: Wholesale price for one tablet = $2.83 Distributor price for one tablet = Producer price for one tablet = [Since Wholesale margin is 35%] [Since Distributor mark-up is 400%] = $0.3679 C) Find
Premium Income Revenue Tram accident
Q1: How many truckloads of product are actually required to carry $10 million of product? Show your calculations. The Wellbutrin XL tablet include the packaging space that stated in the question was. Dimensions of a 18 wheeler trailer was 17m x 4.5m x 2.5m Solution: Firstly‚ change the unit of the 18 wheeler trailer because different unit of measurement cannot calculate the volumes so the dimension of 18 wheeler trailer has change to centimeters. a. To convert the unit of measurement 1 meter (m)
Premium Generally Accepted Accounting Principles Revenue Income
Treatment of analyst can see through case of Jerry Treppel‚ Jerry Treppel had reported that Biovail’s revenue and earnings performance had not been high quality. He also highlighted that sales of Cardizem® CD represented 40% of product sales at Biovail and its reported sales has increased at least 10 million more than previous quarter. Jerry Treppel also issue a report that contained a sell recommendations‚ this come immediately with Biovail response
Premium Corporation Investment Economics
BIOVAIL CORPORATION • REVENUE RECOGNITION There are two possible FOB contract structures mentioned in the case‚ namely FOB shipping point and FOB destination. FOB shipping point means that Biovail would have recognized the revenue the same day it shipped as the sales arrangement was satisfied‚ service rendered‚ and a determinable sales price established. Conversely‚ FOB destination would not have allowed Biovail to recognize the revenue until the shipment reached the distributer. In such a
Premium Generally Accepted Accounting Principles Revenue Income
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
Premium Tablet Generally Accepted Accounting Principles Pharmaceutical formulation
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