Revenue recognition is a very important component of financial accounting and reporting. The accounting principles governing revenue recognition can have a big impact on corporate accounting and the way contracts are structured with customers. As a part of ongoing discussions to converge U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)‚ some proposals to change revenue recognition have been discussed. The following will discuss revenue
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Revenue recognition on FASB and IASB convergence process I. CONVERGENCE OF U.S. GAAP AND IFRS Since 2002‚ Financial Accounting Standards Board (FASB) and International Accounting Standards Board’s (IASB) have been working toward “convergence” of US General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). They have made significant progress in efforts to converge critical accounting standards such as those dealing with revenue recognition‚
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Financial Reporting and Analysis – ACG6175 Date: 5/18/09 Revenue Recognition Problems in the Communications Equipment Industry 1 – In late 2000‚ Lucent announced that revenues would be adjusted downwards by $679 million as a result of revenue recognition problems. Yet the firms market capitalization plummeted by $24.7 billion. Why do you think the market reacted so negatively to Lucent’s announcements of the problems? There is usually a grey zone between aggressive accounting‚ which
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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
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Discuss two ethical challenges faced by the construction industry. In your discussion state why they are ethical challenges? Unethical challenges present in every industry and root of a project‚ which leads to unsuccessful of a project and delays in a projects completion. It is more common in the construction business to contract a part or entire project through a contracting company. There are several ethical challenges that can arise from the contracting a project through a third party contractor
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Assessing Revenue Recognition Timing Explain when each of the following business should recognize revenues: a. A clothing retailer like The Limited. Revenue recognition: Sales basis method (at the time of sale). The revenue for a retail store like The Limited should recognize their revenue when the
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requirements dealing with ethical issues‚ in both the compulsory and optional questions. When ethics appears in an optional question‚ it seems to be a popular choice for candidates in the exam‚ but answers are often lacking in detail and not well applied to the question scenario. The purpose of this article is to assist candidates in terms of knowledge and question technique when tackling a question on ethics. The IESBA Code IESBA’s (IFAC’s) Code of Ethics for Professional Accountants provides a conceptual
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Revenue-Recognition Problems in the Communications Equipment Industry 1) In late 2000‚ Lucent announced that revenues would be adjusted downwards by $679m as a result of revenue recognition problems. Yet the firm’s market capitalization plummeted by $24.7bn. Why do you think the market reacted so negatively to Lucent’s announcements of the problems? The large drop in market capitalization is probably due to several factors. Historically‚ Lucent had successfully met analysts’ projections for
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In the assigned article “Ethical Lessons for Accountants‚” Thomas Buckhoff and LeVon Wilson state that the “good solider” defense does not excuse wrongful behavior. The “good solider” defense states that an individual should not be held responsible for their actions if they were merely following the requests of a supervisor. This defense allows individuals to participate in wrongful behavior and to claim no personal responsibility for their actions. I do not think the “good soldier” defense excuses
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Preparing For Ethical Challenges A survey by the Josephson Institute of Ethics polled more than 20‚000 middle and high school students about moral standards. Almost half of these students reported stealing something from a store in the previous 12 months. In the same period‚ seven out of 10 cheated on an exam. There is more and more evidence of antisocial behavior than ever among our youth. Even our most academically talented students tend to let personal interest triumph over the common good
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