# Biovail Corporation: Revenue Recognition

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Biovail Corporation: Revenue Recognition
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) = 100 centimeters (cm)
Dimensions of 18 wheeler trailer = 17m x 4.5m x 2.5m
17m = 1700cm
4.5m = 450cm
2.5m = 250cm
b. The volume of a 18 wheeler trailer
= 1700cm x 450cm x 250cm
= 191,250,000
c. Quantity of Wellbutrin XL tablet to fill the 18 wheeler trailer full
Q =
Q = 127,500,000
This has shown that the 18 wheeler trailer can be filling with 127,500,000 of Wellbutrin XL tablet.
d. The revenue of each Wellbutrin XL tablet
Wholesaler cost = \$2.83 x = \$2.096
Distributor cost = \$2.096= \$0.4192
e. Total revenue per truck
127,500,000 x \$0.4192 = \$ 53,448,000
One truck can carry \$10million worth of Wellbutrin XL tablet product.
Q2: How should the company recognize revenue based upon the two possible FOB structures mentioned in the case? In order to recognize revenue, there are four conditions must be met as according to GAAP. First, there must have persuasive evidence of an arrangement exists. Although the case does not provide extra information in 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. Second condition is the seller’s price to the buyer is fixed or determinable. We can see clearly that the case provides clear evidence in this aspect. Third condition is where the collection is reasonably assured. It was showing the ongoing relationship between Biovail and the distributor, it appears evident that this aspect was

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