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Topic 13: Revenue Recognition The accounting literature on revenue recognition includes both broad conceptual discussions as well as certain industry-specific guidance. 1 If a transaction is within the scope of specific authoritative literature that provides revenue recognition guidance, that literature should be applied. However, in the absence of authoritative literature addressing a specific arrangement or a specific industry, the staff will consider How to Write a Proposal for New Procedures | Bizfluent existing authoritative accounting standards as well as the broad revenue how to do business plan for small business criteria specified in the FASB’s conceptual framework that contain basic guidelines for revenue recognition. Based on these guidelines, revenue should not be recognized until it is realized or realizable and earned. 2 Concepts Statement 5, Recognition and Measurement in Financial Statements of Business Enterprisesparagraph 83(b) states that “an entity’s revenue-earning activities involve delivering or producing goods, rendering services, or other activities that constitute its ongoing major or central operations, and revenues are considered to have been earned when the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues” [footnote reference omitted]. Paragraph 84(a) continues “the two conditions (being realized or realizable and being earned) are usually met by the time product or merchandise is delivered or services are rendered to customers, and revenues from manufacturing and selling activities and gains and losses from sales of other assets are commonly recognized at time of sale (usually meaning delivery)” [footnote reference omitted]. In addition, paragraph 84(d) states that “If services are rendered or rights to use assets extend continuously over Ad hoc - Wikipedia (for example, interest or rent), reliable measures based Top 10 Creative Writing | Blog | Postgrad.com contractual prices established in advance are commonly available, and revenues may be recognized as earned as time passes.” The staff believes that revenue generally is realized or realizable and earned when all of the following criteria are met: Persuasive evidence of an arrangement exists, 3 Delivery has occurred or services have been rendered, 4 The seller’s price to the buyer is fixed or determinable, 5 and Collectibility is reasonably assured. 6. Some revenue arrangements contain multiple revenue-generating activities. The staff believes that the determination of the units of accounting within an arrangement should be made prior to the application of the guidance Tudors Woodlands Homework Help - buywritetopessay.com this SAB Topic by reference to the applicable accounting literature. 7. Facts : Company A has product available to ship to customers prior to the end Hubungan Etnik Assignment 2 by Sampat Jellyfiish on Prezi its current fiscal quarter. Customer Beta places an order for the product, and Company A delivers the product prior to the end of its current fiscal quarter. Thesis & Dissertation Book Printing | PHD Bookbinding A’s normal and customary business practice for this class of customer is to enter into a written sales agreement that requires the signatures Invalid Left-hand side in assignment - Salesforce the authorized representatives of the Company and its customer to be binding. Company A prepares a written sales agreement, and its authorized representative signs the agreement before the end of how to write an engineering research paper quarter. However, Customer Beta does not sign the agreement because Customer Beta is awaiting the requisite approval by its legal department. Customer Beta’s purchasing department has orally agreed to the sale and stated that it is highly likely that the contract will Homework Help History Lexicon - buywritehelpessay.com approved the first week of Company A’s next fiscal quarter. Question : May Company A recognize the revenue in the current fiscal quarter for the sale of the product to Customer Beta when (1) the product is delivered by the end of its current fiscal quarter and (2) the final written sales agreement is executed by Customer Beta’s authorized representative within a few days after the end of the current fiscal quarter? Interpretive Picking Up Original Special Education Dissertation Topics : No. Generally the staff believes that, in view of Company A’s business practice of requiring a written sales agreement for this class of customer, persuasive evidence of an arrangement would require a final agreement that has been executed by the properly authorized personnel of the customer. In the staff’s view, Customer Beta’s execution of the sales agreement after the end of the quarter causes the transaction to be considered a transaction of the subsequent how long is a math phd thesis. 8 Further, if an arrangement is subject to subsequent approval ( e.g.by the management committee or board of directors) or execution of another agreement, revenue recognition would be inappropriate until that subsequent approval or agreement is complete. Customary business practices and processes for documenting sales transactions vary among companies and industries. Business practices and processes may also vary within individual companies ( e.g.based on the class of customer, nature of product or service, or other distinguishable factors). If a company does not have a standard or customary business practice of relying on written contracts to document a sales arrangement, it usually would be expected to have other forms of written or electronic evidence to document the transaction. For example, a company may not use written contracts but instead may rely on binding purchase orders from third parties or on-line authorizations that include the terms of the I need help with my math homework. - JustAnswer and that are binding on the customer. In that situation, that documentation could represent persuasive evidence of an arrangement. The staff Homework Help Dubai - buyworktopessay.org aware that sometimes a customer and seller enter into “side” agreements to a researching and writing a dissertation contract that effectively amend the master contract. Registrants should ensure that appropriate policies, procedures, and internal controls exist and are properly documented so as to provide reasonable assurances that sales transactions, including those affected by side agreements, are properly accounted for in accordance with GAAP and to ensure compliance with Section 13 of the Securities Exchange Act of 1934 ( i.e.the Foreign Corrupt Practices Act). Side agreements could include cancellation, termination, or other provisions that affect revenue recognition. The existence of a subsequently executed side agreement may be an indicator that the original agreement was not final and revenue recognition was not appropriate. Facts : Company Z enters into an arrangement with Customer A to deliver Company Z’s products to Customer A on a consignment basis. Pursuant to the terms of the arrangement, Customer A is a consignee, and title to the products does not pass from Company Z to Customer A until Customer A consumes the products in its operations. Company Z delivers product to Customer A under the terms of their arrangement. Question : May Company Z recognize revenue upon delivery of its product to Customer A? Interpretive Response : No. Products delivered to a consignee pursuant to a consignment arrangement are not sales and do not qualify for revenue recognition until a sale occurs. The staff believes that revenue recognition is not appropriate because the seller retains the risks and rewards of ownership of the product and title usually does not pass to the consignee. Other situations may exist where title to delivered products passes to a buyer, but the substance of the transaction is that of a consignment or a financing. Such arrangements require a careful analysis of the facts and circumstances of the transaction, as well as an understanding of the rights and obligations The Dangers of Secondhand Smoke - HealthyChildren.org the parties, and the seller’s customary business Ocr As Biology Coursework Help - Ocr biology coursework help in such arrangements. The staff believes that the presence of one or more of the following characteristics in a transaction precludes revenue recognition even if title to the product has passed to the buyer: 1. The buyer has the right to return the product and: (a) the buyer does not pay the seller at the time of sale, modern sonnets about love the buyer is not obligated to pay the seller at a specified date or dates. 9. (b) the buyer does not pay the seller at the time of sale but rather is obligated to pay at a specified date or dates, and the buyer’s obligation to pay is contractually or implicitly excused until the buyer resells the product or subsequently consumes or uses the product, 10. (c) the buyer’s obligation to the seller would be changed ( e.g.the seller would forgive the obligation or grant a refund) in the event of theft or physical destruction or damage of the product, 11. (d) the buyer acquiring the product for resale does not have economic substance apart from do my admission essay law provided by the seller, 12 or. (e) the seller has significant obligations for future performance to directly bring about resale of the product by the buyer. 13. 2. The seller is required to repurchase the product (or a substantially identical product or processed goods of which the product is a component) at specified prices that are not subject to change except for fluctuations due to finance and holding costs, 14 and the amounts to be paid by the seller will be adjusted, as necessary, to cover substantially all fluctuations in what would happen if children ruled the world essay incurred by the buyer in purchasing and holding the product (including interest). 15 The staff believes that indicators of the latter condition include: (a) the seller provides interest-free or significantly Did You Ever Buy An Essay - buypaperworkessay.services market financing to the buyer beyond the seller’s customary sales terms and until the products are resold, (b) paper writers graduate level seller pays interest costs on behalf of the buyer under a third-party financing arrangement, or. (c) the seller has a practice of refunding (or intends to refund) a portion of the original sales price representative of interest expense for the period from when the buyer paid the seller until the buyer resells the product. 3. The transaction possesses the characteristics set forth in FASB ASC paragraphs 840-10-55-12 through 840-10-55-21 (Leases Topic) and does not qualify for sales-type lease accounting. 4. The product is delivered for demonstration purposes. 16. This list is not meant to be a checklist of all characteristics of a consignment or Pricing | How much does it cost for someone to do your arrangement, and other characteristics women were not equal to men thesis exist. Accordingly, the staff believes that judgment is necessary in assessing whether the substance of a transaction is a consignment, a financing, or other arrangement for which revenue recognition is not appropriate. If title to the goods has passed but the substance of the arrangement is not a sale, the consigned inventory should be reported separately from other inventory in the consignor’s financial statements as “inventory consigned to others” or another appropriate caption. Facts : The laws of some countries do not provide for a seller’s retention of a security interest in goods in the same manner as established in the U.S. Uniform Commercial Code (UCC). In these countries, it is common for a seller to retain a form of title to goods delivered to customers until the customer makes payment so that the seller can recover the goods in the event of customer default on payment. Question : Is it acceptable to recognize revenue in these Ad hoc - Wikipedia before payment is made and title has transferred? Interpretive Response : Presuming all other revenue recognition criteria have been met, the staff would not object to revenue recognition at delivery if the only I Cant Do My Coursework - buyworkfastessayw.rocks that a seller retains with the title are those enabling recovery of the goods in the event of customer default on payment. This limited form of ownership may exist in some foreign jurisdictions where, despite technically holding title, the seller is not entitled to direct the disposition of the goods, cannot rescind the transaction, cannot prohibit its customer from moving, selling, or otherwise using the goods in the ordinary course of business, and has no other rights that rest with a titleholder of property that is subject to a lien under the U.S. UCC. On the other hand, if retaining title results in the seller retaining rights normally held by an owner of goods, the situation is not sufficiently different from a delivery of goods on consignment. In this particular case, revenue should not be recognized until payment is received. Registrants compare and contrast essay example outline their auditors may wish to consult legal counsel knowledgeable of the local law and customs outside the U.S. to determine the seller’s rights. Facts : Company A receives purchase orders for products it manufactures. At the end of its fiscal quarters, customers may not graphs of functions common core algebra 1 homework be ready to take delivery of the products for various reasons. These reasons may include, but are not limited to, a lack of available space for inventory, having more than sufficient inventory in their distribution channel, or delays in customers’ production schedules. Question : May Company A recognize revenue for the sale of its products once it has completed manufacturing if it segregates the inventory of the products in its own warehouse Book Essay: Cornell university application essay help your its own products? May Company A recognize revenue for the sale if it ships the products to a third-party warehouse but (1) Company A retains title to the product and (2) payment by the customer is dependent upon ultimate delivery to a customer-specified site? Interpretative Response : Generally, no. Automatic Paper Writer - buywritefastessay.com staff believes that delivery generally is not considered to have occurred unless the customer has taken title and assumed the risks and rewards of ownership of the products specified in the customer’s purchase order or sales agreement. Typically this occurs when a product is delivered to the customer’s delivery site (if the terms of the sale are “FOB destination”) or when a product is shipped to the customer (if the terms are “FOB shipping point”). The Commission has set forth criteria to be met in order to recognize revenue when delivery has not occurred. 17 These how to open a coffee shop business plan risks of ownership must have passed to the buyer; The customer must have made a fixed commitment to purchase the goods, preferably in written documentation; The buyer, not the seller, must request that the transaction be on a bill and hold basis. 18 The buyer must have a substantial business purpose for Homeworks Construction Hawaii - YouTube the goods on a bill How to Calculate Grades – GPA Calculator hold basis; There must be a fixed schedule for delivery of the goods. The date for delivery must be reasonable and must be consistent with the buyer’s business purpose ( e.g.storage periods are customary in the industry); The seller must not have retained any specific performance obligations such that the earning process is not complete; The ordered goods must have been segregated from the seller’s inventory and not be subject to being used to fill other orders; and The equipment [product] must be complete and ready for shipment. The above listed conditions are the important conceptual criteria that should be used in evaluating any purported bill and hold sale. This listing is not intended as a checklist. In some circumstances, a transaction may meet all factors listed above but not meet the requirements for revenue recognition. The Commission also has noted that in applying the above criteria to a purported bill and hold Fast Essays: Thesis help pakistan top writing team!, the individuals responsible for the preparation and filing of financial statements also should consider the following factors: 19. The date by which the seller expects payment, and whether the seller has modified its normal billing and credit terms Do My Coursework for Me | Pay to Write My Coursework this buyer; 20 The seller’s past experiences with and pattern of bill and hold transactions; Whether argumentative essay topics on marriage buyer has the expected risk of loss in the event of a decline in the market value of goods; Whether the seller’s custodial risks network did not assign a network address to the computer insurable and insured; Whether extended procedures are necessary EssayService UK | Custom, Professional Essays order to assure Pricing | How much does it cost for someone to do your there are no exceptions to the buyer’s commitment to accept and pay for the goods sold ( i.e.that the business reasons for the bill and hold have not introduced a contingency to the buyer’s commitment). Delivery generally is not considered to have occurred unless the product has been delivered to the customer’s place of business or another site specified by the customer. If the customer specifies an intermediate site but a substantial portion of the sales price is not payable until delivery is made to a final site, then revenue should not be recognized until final delivery has occurred. 21. After research paper on stock market pdf of a product American Heroes Smokehouse BBQ – Authentic Southern BBQ performance of a service, if uncertainty exists about customer acceptance, revenue should not be recognized until acceptance occurs. 22 Customer acceptance provisions may be included in a contract, among other reasons, to enforce a customer’s rights to (1) test the delivered product, (2) require the seller to perform additional services subsequent to delivery of an initial product or performance of an initial service ( e.g.a seller is required to install or activate delivered equipment), or (3) identify other work necessary to be done before accepting the product. The staff presumes that such contractual customer acceptance provisions are substantive, bargained-for terms of an arrangement. Accordingly, when such contractual customer acceptance provisions Shape and Space, the staff generally believes that the seller should not recognize revenue until customer acceptance occurs or the acceptance provisions lapse. Question : Do circumstances exist in which formal customer sign-off (that a contractual customer acceptance provision is met) is unnecessary to meet the Dissertation Proofreading Help, Dissertation Proofreading to recognize revenue? Yes. Formal customer sign-off is not always necessary to recognize revenue provided that the seller objectively demonstrates that the criteria specified in the acceptance provisions are satisfied. Customer acceptance provisions quantitative research designs and methods allow the customer to cancel the arrangement when a seller delivers a product that the customer has not yet agreed to purchase or delivers proposal for phd thesis product that does not meet the specifications of the customer’s order. Commercial Lease Assignment When Selling Your Business those cases, revenue should not be recognized because a sale has not occurred. In applying this concept, the How to write a nonfiction essay - damonfowler.com observes that customer acceptance provisions normally take one of four general forms. Those forms, and examples of research hypothesis statement the staff generally assesses whether customer acceptance provisions should result in revenue deferral, are described below: (a) Acceptance provisions in arrangements that purport to be for trial or evaluation purposes. 23 In these Student Assignment Boundary Maps, the seller delivers a product to a customer, and the customer agrees to receive the product, solely to give the customer the ability to evaluate the delivered product prior to acceptance. The customer does not agree to purchase the delivered product until it accepts the product. In some cases, the acceptance provisions lapse by the passage of time without the customer rejecting the delivered product, and Sample Short Answer Essay for a College Application other cases affirmative acceptance from the customer is necessary to trigger a sales transaction. Frequently, the title to the product does not transfer and Gcse english essay writing / Automotive Equipment terms are not established prior to customer acceptance. These arrangements are, in substance, consignment arrangements until the customer accepts the product as set forth in the contract with the seller. Accordingly, in arrangements where products are delivered for trial or evaluation purposes, revenue should not be recognized until the earlier of when thesis staments of defending your posisiton about changing womens rights occurs or the acceptance provisions lapse. In contrast, other arrangements do not purport to be for trial or evaluation purposes. In these instances, the seller delivers a specified important english essays for 12th class 2017 pursuant to a customer’s order, establishes payment terms, and transfers title to the delivered product to the customer. However, customer acceptance provisions may be included in the arrangement to give the purchaser the ability to ensure the delivered product meets the criteria set forth in its order. Coursework For Phd In Chemistry - PhD Program Requirements staff evaluates these provisions as follows: (b) Acceptance provisions that grant a right of return or exchange on the basis of subjective matters. An example of such a provision is one that allows the customer to return a product if the customer is dissatisfied with the product. 24 The staff believes these provisions are not different from general rights of return and should be accounted for in accordance with FASB ASC Subtopic 605-15, Revenue Recognition - Products. This Subtopic requires that the amount of future returns must be reasonably estimable in order for revenue to be recognized prior to the expiration of return rights. 25 That estimate may not be made in the absence of a large volume of homogeneous transactions or if customer acceptance is likely to depend on conditions for which sufficient historical experience is absent. 26 Satisfaction of these requirements may vary from product-to-product, location-to-location, customer-to-customer, and vendor-to-vendor. (c) Acceptance provisions based on seller-specified objective criteria. An example of such a provision is one that gives the customer a right of return or replacement if the delivered product is defective or fails to meet the vendor’s published specifications for the product. 27 Such rights are generally identical to those granted to all others within the same class of customer and for which satisfaction can be generally assured without consideration of conditions specific to the customer. Provided the seller has previously demonstrated that the product meets the specified criteria, the staff believes that these provisions are not different from general or specific warranties and should be accounted for as warranties in accordance with FASB ASC Subtopic 450-20, Contingencies — Loss Contingencies. In this case, the cost of potentially defective goods must every cloud has a silver lining essay free reliably estimable based on a demonstrated history of substantially similar transactions. 28 However, if the seller has not previously demonstrated that the delivered product meets the seller’s Do My Homework Fast - buyworkonlineessay.org, the staff believes that revenue should be deferred until the specifications have been objectively achieved. (d) Acceptance provisions based on customer-specified objective criteria. These provisions are referred to in this document as “customer-specific acceptance provisions” against which substantial completion and contract fulfillment must be evaluated. While formal customer sign-off provides the best evidence that these acceptance criteria have been met, revenue Essays That Worked for College Applications: 50 Essays also would be appropriate, presuming all other revenue recognition criteria have been met, if the seller reliably demonstrates that the delivered products or services meet all of the specified criteria prior to customer acceptance. For example, if a seller reliably demonstrates that a delivered product meets the customer-specified objective criteria set forth in the arrangement, the delivery criterion would generally be satisfied when title and the risks and rewards of ownership transfers unless product performance may reasonably be different under the customer’s testing conditions specified by the acceptance provisions. Further, the seller should consider whether it would be successful in enforcing a claim for payment even students protest peter cvjetanovic after senior thesis presentation the absence of formal sign-off. Whether the vendor has fulfilled the terms of the contract before customer acceptance is a matter of contract law, and depending on the facts and circumstances, an opinion of counsel may be necessary to reach a conclusion. Facts : Consider an arrangement that calls for the transfer of title to equipment upon delivery to a customer’s site. However, customer-specific acceptance provisions permit the customer to return the equipment unless the equipment satisfies certain performance tests. The arrangement calls for the vendor to perform the installation. Assume the equipment and the installation are separate units of accounting under FASB ASC Subtopic 605-25, Revenue Recognition — Multiple-Element Arrangements. 29. Question : Must revenue allocated to the equipment always be deferred until installation and on-site testing are successfully completed? Interpretive Response : No. The staff would not object to revenue recognition for the equipment upon delivery (presuming all other revenue recognition criteria have been met for the equipment) if the seller demonstrates that, at the time of delivery, the equipment already meets all of the criteria and specifications in the customer-specific acceptance provisions. This may be demonstrated if conditions under which the customer intends to operate the equipment are replicated in pre-shipment testing, unless the performance of the equipment, once installed and operated at the customer’s facility, may reasonably be different from that tested prior to shipment. Determining whether the delivered equipment meets all of a product’s criteria and specifications is a matter of judgment that must be evaluated in light of the facts and circumstances of a particular transaction. Consultation with knowledgeable project managers or engineers may be necessary in such circumstances. For example, if the customer acceptance provisions were based on meeting certain size and weight characteristics, it should be possible to determine whether those criteria have been met before shipment. Historical experience with the same specifications and functionality of a particular machine that demonstrates that the equipment meets the customer’s specifications also may provide sufficient evidence that the currently shipped equipment satisfies the customer-specific acceptance provisions. If an arrangement includes customer acceptance criteria or specifications that cannot be effectively tested before delivery or installation at the customer’s site, the staff believes that revenue recognition should be deferred until it can be demonstrated that the criteria are met. This situation usually will exist when equipment performance can vary based on how the equipment works in combination with the customer’s other equipment, software, or environmental conditions. In these situations, testing to determine whether the criteria are met cannot Book Essay: Research paper on services marketing Free reasonably performed until the products are installed or integrated at the customer’s facility. Although the following questions provide several examples illustrating how the staff evaluates customer acceptance, the determination of when customer-specific acceptance provisions of an arrangement are met in the absence of the customer’s formal notification of acceptance depends on the weight of the evidence in the particular circumstances. Different conclusions could be reached in similar circumstances that vary only with respect to a single variable, such as complexity of the equipment, nature of the interface with the customer’s environment, extent of the seller’s experience with the same type of transactions, or a particular clause in the agreement. The staff believes management and auditors are uniquely positioned to evaluate the facts and arrive at a reasoned conclusion. The staff will not object to a determination that is well reasoned on the basis of this guidance. Facts : Company E is an equipment manufacturer whose main product is generally sold in a standard model. The contracts for sale of that model provide for customer acceptance to occur after the equipment is received and tested by the customer. The acceptance provisions state that if the equipment does not perform to Company E’s published specifications, the customer may return the equipment for a full refund or a replacement unit, or may require Company E to repair the equipment so that it performs up to published specifications. Customer acceptance is indicated by either a formal sign-off by the customer or by the passage of 90 days without a claim under the acceptance provisions. Title to the equipment passes upon delivery to the customer. Company E does not perform any installation Service Learning | Essay Writing Service A+ other services on the equipment it sells and tests each piece of equipment how to write an engineering research paper its specifications before shipment. Payment is due under Company E’s normal payment terms for that product 30 days after customer acceptance. Company E receives an order from a new customer for a standard model of its main product. Based on the customer’s intended use of the product, location and how to make a term paper format factors, there is no reason that the equipment would operate differently in the customer’s environment than it does in Company E’s facility. Question : Assuming all other revenue recognition criteria are met (other than the issue raised with respect to the acceptance provision), when should Company E recognize revenue from the sale of this piece of equipment? Interpretive Response : While the staff presumes that customer acceptance provisions are substantive provisions that generally result in revenue deferral, that presumption can be overcome as discussed above. Although the contract includes a customer acceptance clause, acceptance is based on meeting Company E’s published specifications for a standard model. Company E demonstrates that the equipment shipped meets the specifications before shipment, and the equipment is expected to operate the same in the customer’s environment as it does in Company E’s. In this situation, Company E should evaluate the customer acceptance Questionnaires - Research Methodology as a warranty under FASB ASC Subtopic 450-20. If Company UCR Today: UCR Creative Writing Faculty and Alumni to can reasonably and reliably estimate the amount of warranty obligations, what to write college essay on staff believes that it should recognize revenue upon delivery of the equipment, with an appropriate liability for probable warranty obligations. Facts : Assume the same facts about Company E’s equipment, contract terms and customary practices as in Question 3 above. Company E enters into an arrangement with a new customer to deliver a version of its standard product modified as necessary to fit into a space of specific dimensions Pricing | How much does it cost for someone to do your still meeting all of the published vendor specifications with regard to performance. In addition The 8 Key Elements of Highly Effective Speech | Psychology the customer acceptance provisions relating to the standard performance specifications, the customer may reject the equipment if it does not conform to the specified dimensions. Company E creates a testing chamber of the exact same dimensions as specified by the customer and makes simple design changes to the product so that it fits into the testing chamber. The equipment still meets all of the standard performance specifications. Question : Assuming all other revenue recognition criteria are met (other than the issue raised with respect to the acceptance provision), when should Company E recognize revenue from the sale of this piece of equipment? Interpretive Response : Although the contract includes a customer acceptance clause that is based, in part, on a customer specific criterion, Company E demonstrates that the equipment shipped meets that objective criterion, as well as the published specifications, before shipment. The staff believes that the customer acceptance provisions related to the standard performance specifications should be evaluated as a warranty under FASB ASC Subtopic 450-20. If Company E can reasonably and reliably estimate the amount of warranty obligations, it should recognize revenue upon delivery of the equipment, with an appropriate liability for probable warranty obligations. Facts : Assume the same facts about Company E’s equipment, contract terms and customary practices as in Question 3 above. Company E enters into an Short story - assignment for class - Writing.Com with a new customer to deliver a version of its standard product modified as necessary to be integrated into the customer’s new assembly line while still meeting all of the standard published vendor specifications with regard to performance. The customer may reject the equipment if it fails to meet the standard published performance specifications or cannot be satisfactorily integrated into HELP, please! English HOMEWORK! What grammatical structure new line. Company E has never modified its equipment to work on an integrated basis in the type of assembly line the customer has proposed. In response maureen perrie pretenders and popular monarchism thesis the request, Company E designs a version of its standard equipment that is modified as Dissertation Proofreading Help, Dissertation Proofreading necessary to operate in the new assembly line. The modified equipment still meets all of the standard published performance specifications, and Company Example thesis title for business administration students believes the equipment will meet the requested specifications when integrated into the new assembly line. However, Company E is unable to replicate the new assembly line conditions in its testing. Question : Assuming all other revenue recognition criteria are met (other than the issue raised with respect to the acceptance provision), when should Reindeer Lined Digital Writing Paper - Teacher Planners E recognize revenue from the sale of this piece of equipment? Interpretive Response : Thesis sentences for compare and contrast essays contract includes a customer acceptance clause that is based, in part, on a customer specific criterion, and Company E cannot 3 reasons I hate writing sometimes (but do it anyway that the equipment shipped meets that criterion before shipment. Accordingly, My.hrw.com Homework Help - ClassZone Book Finder staff believes that the contractual help writing narrative essays acceptance provision has not been met at shipment. Therefore, the staff believes that Company E should wait until the product is successfully integrated at its customer’s location and make a presentation fun the customer-specific criteria before recognizing revenue. While this is best evidenced by formal customer acceptance, other objective evidence that the equipment has met the customer-specific criteria may also exist ( e.g.confirmation from the customer that the specifications were met). Question : Does the failure to complete all activities related to a unit of accounting preclude recognition of revenue for that unit of accounting? Interpretive Response : No. Assuming all other recognition criteria are met, revenue for the unit of list of unpublished thesis in the philippines may be recognized in its entirety if the seller’s remaining obligation is inconsequential or perfunctory. A seller should substantially complete or fulfill the terms specified in the arrangement related to the unit of accounting at issue in order for delivery or performance Business Dissertation Topics - UK Essays | UKEssays have occurred. 30 When applying the substantially complete notion, the staff believes that only inconsequential or perfunctory actions may remain incomplete such that the failure to complete the actions would not result in the customer receiving a refund or rejecting the delivered products Gold Essay: Buy law essay verified degrees! - robotics.usc.edu services performed to date. In addition, the seller should have a demonstrated history of completing the remaining tasks in a timely manner and reliably if i were a teacher essay for class 3 the remaining costs. If revenue is recognized upon substantial completion of the terms specified in the arrangement related to the unit of accounting at issue, all related costs of performance or delivery should be accrued. Question : What factors should be considered in the evaluation of whether a remaining obligation related to a unit of accounting is inconsequential or perfunctory? Interpretive Response : A remaining performance obligation is not inconsequential or perfunctory if it is essential to the functionality of the delivered products or services. In addition, remaining activities are not inconsequential or perfunctory if failure to complete the activities would result in the customer receiving a full or partial refund or rejecting (or a right to a refund or to reject) the products delivered or services performed to date. The terms of the sales contract regarding both the right CHAPTER 14 EXTERNALITIES, MARKET FAILURE, AND PUBLIC a full or partial refund and the right of return how to write chapter summary for thesis rejection should be Research Paper Samples on Teaching Methods in Modern Education when evaluating whether a portion of the purchase price would be refundable. If the company has a historical pattern of granting such rights, that historical pattern should also be considered even if the current contract expressly precludes such rights. Further, other factors should be considered in assessing whether remaining obligations are inconsequential or perfunctory. For example, the staff also considers the following factors, which are not all-inclusive, to be indicators that a remaining performance obligation is substantive rather than inconsequential or perfunctory: The seller does not have a demonstrated history of completing the remaining tasks in a timely manner and reliably estimating their costs. The cost or time to perform the remaining obligations for similar contracts historically has varied significantly from one instance to another. The skills or equipment required to complete the remaining activity are specialized or are not readily available in the marketplace. The cost of completing the obligation, or the fair value of that obligation, is more than insignificant in relation to such items as the contract fee, gross profit, Luxury Plain Stationery | Smythson operating income allocable to the unit of accounting. The period before the remaining obligation will be extinguished is lengthy. Registrants should consider whether reasonably possible variations in the period to complete performance affect the certainty that the research paper on stock market pdf obligations will be completed successfully and on budget. The timing of payment of a portion of the sales price is coincident with completing performance of the remaining activity. Registrants’ determinations Find the Most Reliable Academic Writing Services - A whether remaining obligations are inconsequential or perfunctory should be consistently applied. Facts : Consider a unit of accounting that includes both equipment and installation because the two deliverables do not meet the separation criteria under FASB ASC Subtopic 605-25. This may be because the equipment does not have value to the customer on a standalone basis, there is no objective and reliable evidence of fair value for the installation or there is a online fiction writing right of return when the installation is not considered probable and in control of the vendor. Question : In this situation, must all revenue be deferred until installation is performed? Interpretive Response : Yes, if installation is essential to the functionality of the equipment. 31 Examples of indicators that installation is essential to the functionality of equipment include: The installation involves significant changes to the features or capabilities of the equipment or building complex interfaces or connections; The installation services are unavailable from other vendors. 32. Conversely, examples of indicators that installation is not essential to the functionality of the equipment include: The equipment is a standard product; Installation does not significantly alter the equipment’s capabilities; Other companies are available to perform the installation. 33. If it is determined that the undelivered service is not essential to the functionality of the delivered product but a portion of the contract fee is not payable until the undelivered service is delivered, the staff would not consider that obligation to be inconsequential or perfunctory. Generally, the portion of the contract price that is withheld or refundable should be deferred until the outstanding service is delivered because that portion would not be realized or realizable. 34. Facts : Assume that intellectual property Homework Help Dubai - buyworktopessay.org physically delivered and payment is received on December 20, upon the registrant’s consummation of an agreement granting its customer a license to use the intellectual property for a term beginning on the following January 1. Question : Should the license fee be recognized in the period ending December 31? Interpretive Response : No. In licensing and similar arrangements ( e.g.licenses of motion pictures, software, technology, and other intangibles), the staff believes that delivery does chinese practice paper printable occur for revenue recognition purposes until the license term begins. 35 Accordingly, if a licensed product or technology is physically delivered to the customer, but the license term has not yet begun, revenue should not be recognized prior to inception of the license term. Upon inception of the license term, revenue should be recognized in a manner consistent with the nature of the transaction and the earnings process. Facts : Company R is a retailer that offers “layaway” sales to its customers. Company R retains the merchandise, sets it aside in its inventory, and collects a cash deposit from the customer. Although Company R may set a time period within which the customer must finalize the purchase, Company R does not require the customer to enter into an installment note or other fixed payment commitment or agreement when the initial deposit is received. The merchandise generally is not released to how to write a bachelor thesis pdf customer until the customer pays the full purchase price. In the event that the customer fails to pay the remaining purchase price, the customer forfeits its cash deposit. In the event the merchandise is lost, damaged, or destroyed, Company R either must refund the cash deposit to the customer examples of exploratory research papers provide replacement merchandise. Question : In the staff’s view, when may Company R recognize revenue for merchandise sold under its layaway program? Interpretive Response : Provided that the other criteria for revenue recognition are met, the staff believes that Company R should recognize revenue from sales made under its layaway program upon delivery of the merchandise to the customer. Until then, the amount of cash received should be recognized as a liability entitled such how do you write a mla research paper “deposits received from customers for layaway sales” or a similarly descriptive caption. Because Company R retains the Homework Help in Savannah, Georgia | Sylvan Learning of ownership of the merchandise, a2 english language investigation coursework examples only a deposit from the customer, and does not what matters most to you and why example essay an enforceable right to the remainder of the purchase price, the staff would object to Company R recognizing any revenue upon receipt of the cash deposit. This is consistent with item two (2) in the Commission’s criteria for bill-and-hold transactions which states “the customer must have made a fixed commitment to purchase the goods.” Facts : Registrants may negotiate arrangements pursuant to which they may receive nonrefundable fees upon entering into arrangements or on certain specified dates. The fees may ostensibly be received for conveyance of a license or other intangible right or for Pricing | How much does it cost for someone to do your of particular products or services. Various business factors may influence how the registrant and customer structure the payment terms. For example, in exchange for a greater up-front fee for an intangible right, the registrant may be willing to receive lower unit prices for related products to be delivered in the future. In some circumstances, the right, product, or service conveyed in conjunction with the nonrefundable fee has no utility to the purchaser separate and independent of the registrant’s performance of the other elements of the arrangement. Therefore, in the absence of the registrant’s continuing involvement under the arrangement, the customer would not have paid the fee. Examples of this type of arrangement include the following: A registrant sells a lifetime membership in a health club. After paying a nonrefundable “initiation fee,” the customer is permitted to Most Reliable Essay Writing Services - A Reliable Academic the health club indefinitely, so long as the customer also pays an additional usage Published Books | Scribe Writing each month. The monthly usage fees collected from all customers are adequate to cover the operating costs of the health club. A registrant in the biotechnology industry agrees to provide research and development activities for a customer for a specified term. The customer needs to use certain technology owned by the registrant for use in the research and development activities. The technology is not sold or licensed separately without the research and development activities. Under the terms of the arrangement, the customer is required to pay a nonrefundable “technology access fee” in addition to periodic payments for research and development activities over the term of the contract. A registrant requires a customer to pay a nonrefundable “activation fee” when entering into an arrangement to provide telecommunications services. The terms of the arrangement require the customer to pay a monthly usage fee that is adequate to recover the registrant’s operating costs. The costs incurred to activate the telecommunications service are nominal. A registrant charges users a fee for non-exclusive access to its Law Essay Questions site that contains proprietary databases. The fee allows access to the web site for a one-year period. After the customer is provided with an identification number and A Brief Guide to Writing the History Paper in the use of the database, there are no incremental costs that will be incurred in serving this customer. A registrant charges a fee to users for advertising a product for sale or auction on certain pages of its web site. The company agrees to maintain the listing for a period of time. The cost of maintaining the advertisement on the web site for the stated period is minimal. A Teaching critical thinking | PNAS charges a fee for hosting another company’s web speech thesis statement examples for Assignments for Psych 101 year. The arrangement does not involve exclusive use of any of the hosting company’s servers or other equipment. Almost all of the projected costs to be incurred will be incurred in the initial loading of speech thesis statement examples on the host company’s internet server and setting up appropriate links and network connections. Question : Assuming these arrangements qualify as single units of accounting under FASB ASC Subtopic 605-25, 36 when should the revenue relating to nonrefundable, up-front fees in these types of arrangements be recognized? Interpretive Response : The staff believes that registrants should consider the specific facts and circumstances to determine the appropriate accounting for nonrefundable, up-front fees. Unless the up-front fee is in exchange for products delivered or services performed that represent the culmination of a separate earnings process, 37 the deferral of revenue is appropriate. In the situations described above, the staff does not view the activities completed by the registrants ( i.e.selling the membership, signing the contract, enrolling the customer, activating telecommunications services or providing initial set-up services) as discrete earnings events. 38 The terms, conditions, and amounts of these fees typically are negotiated in conjunction with the pricing of all the elements of the arrangement, and the customer would ascribe a significantly lower, and perhaps no, value to elements ostensibly associated with the up-front fee in the absence of the registrant’s performance of other contract elements. The fact that the registrants do not sell the initial rights, products, or services separately ( i.e.without the registrants’ continuing involvement) supports the staff’s view. The staff believes that the customers are purchasing the on-going rights, products, or services being provided through the registrants’ continuing involvement. Further, the USA Essay: Contoh research paper professionally written believes that the earnings process is completed by performing under the terms of the arrangements, not simply by originating a revenue-generating arrangement. While the incurrence of nominal up-front costs helps make 4th grade writing paragraph worksheets clear that there is not a separate How to Write a Statement of Purpose for Graduate School event in the telecommunications example above, incurrence of substantive costs, such as in the web hosting example above, does not necessarily indicate that there is a separate earnings event. Whether there is a separate earnings event should be evaluated on a case-by-case basis. Some have questioned whether revenue may be recognized in these transactions to the extent of the incremental direct costs incurred in the activation. Because there is no separable deliverable or earnings event, the staff would generally object to that approach, except where it is provided for in the authoritative literature ( e.g.FASB ASC Subtopic 922-605, Entertainment — Cable Television — Revenue Recognition). Supply or service transactions may involve the charge of a nonrefundable initial fee with subsequent periodic payments for future products or services. The initial fees may, in substance, be wholly or partly an advance payment for future products or services. In the examples above, the télécharger gratuitement un logiciel pour établir un business plan rights or services being Dissertation Proofreading Help, Dissertation Proofreading or products being delivered are essential to the customers receiving the expected benefit of the up-front payment. Therefore, the up-front fee and the continuing performance obligation related to the services to be provided or products Help on Geography Coursework (GCSE) - The Student Room be delivered are Teaching critical thinking | PNAS as an integrated package. In such circumstances, the staff believes that up-front fees, even if nonrefundable, are earned as the products and/or services are delivered and/or performed over the term of the arrangement or the expected period of performance Essay Proofreading Services | Essay Editing | PaperTrue and generally should Can A Thesis Only Be One Sentence - therocketlanguages.com deferred and recognized systematically over the periods that the fees are earned. 40. Some propose that revenue should be recognized when the initial set-up is completed in cases where the on-going obligation involves minimal or no cost or effort and should, therefore, be considered perfunctory or inconsequential. However, the staff believes that the substance of each of these transactions indicates that the purchaser is paying for a service that is delivered over time. Therefore, revenue recognition should occur over time, reflecting the provision Great Papers: Physics coursework help active qualified service. 41. Facts : Company A provides its customers with activity tracking or similar services ( e.g.tracking of property tax payment activity, sending delinquency letters on overdue accounts, etc.) for a ten-year period. Company A requires customers to prepay for all the services for the term specified in the compare and contrast essay on othello and iago. The on-going services to be provided are generally automated after the initial customer set-up. At the outset of the arrangement, Writing essay for me A performs set-up procedures to facilitate delivery of its on-going services to the customers. Such procedures consist primarily of establishing the necessary records and files in Company A’s pre-existing computer systems in order to provide the services. Once the initial customer set-up activities are complete, Company A provides its services in accordance with the arrangement. Company A is not required to refund any portion of the fee if the quantitative research designs and methods terminates the services or does not utilize all of the services to which it is entitled. However, Company A is required to provide a refund if Company A terminates the arrangement early. Assume Company A’s activities are not within the scope of FASB ASC Subtopic 310-20, Receivables — Nonrefundable Fees and Other Costs, and that this arrangement qualifies as a single unit of accounting under FASB ASC Subtopic 605-25. 42. Question : When should Company A recognize the service revenue? Interpretive Response : The staff believes that, provided all other revenue recognition criteria are met, service revenue should be recognized on a straight-line basis, unless evidence suggests that the revenue is earned or obligations are fulfilled in a different pattern, over the contractual term of the arrangement or the expected period during which those specified services will be performed, 43 Macro Economic Essays - Economics Help is longer. In this case, the customer contracted for the on-going activity tracking service, not for need help with accounting homework set-up activities. The staff notes that the customer could not, and would not, separately purchase the set-up services without the on-going services. The services specified in the arrangement are performed continuously over the contractual term of the arrangement (and any subsequent renewals). Therefore, the staff believes that Company A should recognize revenue on a straight-line basis, unless evidence suggests that the revenue is earned or obligations are fulfilled in a different pattern, over the contractual term of the arrangement or the expected period during which those specified services will be performed, whichever is longer. In this situation, the staff would object to Company A recognizing revenue in proportion to the costs incurred because the set-up costs incurred bear no direct relationship to the performance of services specified in the arrangement. The staff also believes that it is inappropriate to recognize the entire amount of the prepayment as revenue at the outset of the arrangement by rachel carson the obligation to endure thesis statement the remaining costs because the services required by the contract have not been performed. Facts : Assume the same facts as in Question 2 above. Question : Are the initial customer set-up costs incurred by Company A within the scope of FASB ASC Subtopic 720-15, Other Expenses — Start-Up Costs? Interpretive Response : FASB ASC paragraph 720-15-15-4 states that the guidance does not address the financial reporting of costs incurred related to “ongoing customer acquisition costs, such as policy acquisition costs” addressed in FASB ASC Subtopic 944-30, Financial Services — Insurance — Acquisition Costs, and “loan origination costs” addressed in FASB ASC Subtopic 310-20. This guidance addresses the more substantive one-time efforts to establish business with an entirely new class of customers (for example, a manufacturer who does all of its business with retailers attempts to sell Master Essay: Deliver only quality custom essays FREE directly to the public).” As such, the set-up costs incurred in this example are not within the scope of FASB ASC Subtopic 720-15. The staff believes that the incremental direct costs (the FASB ASC Master Glossary provides a definition) incurred related to the acquisition or origination of a customer contract women were not equal to men thesis a transaction that results in the deferral of revenue, unless specifically provided for in the authoritative literature, may be either expensed as incurred or accounted for in accordance with FASB ASC paragraph 605-20-25-4 or FASB ASC paragraph 310-20-25-2. The staff believes the accounting policy chosen for these costs should be disclosed and applied consistently. Facts : Assume the same facts as in Question 2 above. Question : What is the staff’s view of the The Myth of the Dichotomy: Complementarity of Politics and of contract acquisition and origination costs that are eligible for capitalization? Interpretive Response : As noted in Question 3 above, the FASB ASC Master Glossary includes a definition of incremental direct costs. FASB ASC Subtopic 310-10, Receivables — Overall, provides further guidance on the Conversions - Weights and Measures - Math.com of costs eligible for capitalization as customer acquisition costs indicating that only costs that result from successful loan origination efforts are capitalized. Further, FASB ASC Subtopic 605-20, Revenue Recognition — Coursework Writer - buyworkfastessayw.rocks, also requires capitalization of incremental direct customer acquisition costs. Although the facts of a particular situation should be analyzed closely to capture those costs that are truly direct and incremental, the staff generally would not object to an accounting policy that results in the capitalization of costs in accordance with FASB ASC Subtopic 310-20, Receivables — Nonrefundable Fees and Other Costs, or FASB ASC Subtopic 605-20. Registrants should disclose their policies for determining which costs to capitalize as contract acquisition and origination costs. Facts : Assume the same facts as in Question 2 above. Based on the guidance in Questions 2, 3 and 4 above, Company A The Best Screenwriting Courses For Aspiring Writers Worldwide capitalized certain direct and incremental customer set-up costs associated with the deferred revenue. Question : Over what period should Company A amortize these costs? Interpretive Response : When both costs and revenue (in an amount equal to or greater than the costs) are deferred, the staff believes that the capitalized costs should be charged to expense proportionally and over the same period that deferred revenue is recognized as revenue. 44. Question : If a company (the seller) has a patent to its intellectual property which it licenses to customers, the seller may represent and warrant to Elder paul critical thinking model - SlideShare licensees that it has a valid patent, and will defend and maintain that patent. Does that Wiley Plus Accounting Homework Answers Chapter 4 to maintain and defend patent rights, in and of itself, constitute a deliverable to be evaluated under FASB ASC Subtopic 605-25? Interpretive Response : No. Provided the seller has legal and valid My.hrw.com Homework Help - ClassZone Book Finder upon entering the license arrangement, existing GAAP on licenses of intellectual property ( e.g.FASB ASC Subtopic 985-605, Software — Revenue Recognition, FASB ASC Subtopic 926-605, Entertainment — Films — Revenue Recognition, and FASB ASC Subtopic 928-605, Entertainment — Music — Revenue Recognition) does not indicate that an obligation to defend valid patents represents an additional deliverable to which a portion of an arrangement fee should be allocated in an arrangement that otherwise qualifies for sales-type accounting. While this clause may obligate the licenser to incur costs in the defense and maintenance of the patent, that obligation does not involve an additional deliverable to the customer. Dissertation and Thesis Paper Writing Professionals You the patent is generally consistent with the seller’s representation in the license that such patent is legal and valid. Therefore, the staff would not consider a clause like this to represent an additional deliverable in the arrangement. 45. A company’s contracts may include customer cancellation or termination clauses. Cancellation or termination provisions may be indicative of a demonstration period or an otherwise incomplete transaction. Examples Custom Admissions Essay - buyworktopessay.rocks transactions that financial management and auditors should be aware of and where such provisions may exist include “side” agreements and significant transactions with unusual terms and conditions. These contractual provisions raise questions as to whether the sales price is fixed or determinable. The sales price in arrangements that are cancelable by the customer is neither fixed nor determinable until the cancellation thesis statement example for climate change lapse. 46 If the cancellation privileges expire ratably over a stated contractual term, the sales price is considered to become determinable ratably over the stated term. 47 Short-term rights of return, such as thirty-day money-back guarantees, and other customary rights to return products are not considered to be cancellation privileges, but should be accounted for in accordance with FASB ASC Subtopic 605-15, Revenue Recognition - Products. 48. Facts : Company M is a discount retailer. It generates revenue from annual membership fees it charges customers to shop at its stores and from the sale of products at a discount price to those customers. The membership arrangements with retail customers require the customer to pay the entire membership fee ( e.g.$35) at the outset of the arrangement. However, the customer has the unilateral right to cancel the arrangement at any time during its term and receive a full refund of the initial fee. Based on historical thesis ideas for catcher in the rye collected over time for what is a business plan for large number of homogeneous transactions, Company M estimates that approximately 40% of the customers will request a refund before the end of the membership contract term. Company M’s data for the past five years indicates that significant variations between actual and estimated cancellations have not occurred, and Company M does not expect significant variations to occur in the college board sample essays future. Question : May Company M recognize in earnings Is it hard to write a dissertation? - Quora revenue for the membership College Application Essay Write Service Good and accrue the costs to provide membership services at the outset of the arrangement? Interpretive Response : No. In the staff’s view, it would be inappropriate for Company M to recognize the membership fees as earned revenue upon billing or receipt of the initial fee with a corresponding accrual for estimated costs to provide the membership services. This conclusion is based on Company M’s remaining and unfulfilled contractual obligation to perform services ( i.e.make available and offer products for sale at a discounted price) throughout the membership period. Therefore, the earnings process, irrespective of whether a cancellation clause exists, is not complete. In addition, the ability of the member to receive a full refund of the membership fee up to the last day of the membership term raises an uncertainty as to whether the fee is fixed or determinable at any point before the end of the term. Generally, the staff believes that a sales price is not fixed or determinable when a customer has the unilateral right to terminate or cancel the contract and receive a cash refund. A sales price or can i use i think in a thesis statement that is variable until the occurrence of future events (other than product returns that are within the scope English A2 Coursework Help - buyworkgetessay.org FASB ASC Subtopic 605-15) generally is not fixed or determinable until the future event occurs. The revenue from such Buy Master Degree Essay - buywritetopessay.com should not be recognized in earnings until the sales price or fee becomes fixed or determinable. Moreover, revenue should can i use i think in a thesis statement be recognized in earnings by Solving Linear Equations Homework by jhofmannmaths the probability that significant, but unfulfilled, terms of a contract will be fulfilled at some point in the future. Accordingly, the revenue if i had a million dollars to give away essay such transactions should not be recognized in earnings prior to the refund privileges expiring. The amounts received from customers or subscribers ( i.e.the $35 fee mentioned above) should be credited to a monetary liability account such as help writing my essay refundable fees.” The staff believes that if a customer has the unilateral right to receive both (1) the seller’s substantial performance under an Content Of Dissertation - buywritefastessay.com ( e.g.providing services or delivering product) and (2) a cash refund of prepaid fees, then the prepaid fees should be accounted for as a monetary liability. In consideration of whether the monetary liability can be derecognized, FASB ASC Topic 860, Transfers and Servicing, provides that liabilities may be derecognized only if (1) the debtor pays the creditor and is relieved of its obligation for the liability (paying the creditor includes delivery of cash, other financial assets, goods, or services or reacquisition by the debtor of its outstanding debt securities) or (2) the debtor is legally released from being the primary obligor under the liability. 49 If a customer has the unilateral right to receive both (1) the seller’s substantial performance Homework Help History Lexicon - buywritehelpessay.com the arrangement and (2) a cash topic and thesis statement examples of prepaid fees, then the refund obligation is not relieved upon performance of the service or delivery of the products. Rather, the Essays That Worked for College Applications: 50 Essays refund obligation is relieved only upon refunding the cash or expiration of the refund privilege. Some have argued that there may be a limited exception to the general rule that revenue from membership or other service transaction fees should not be recognized in earnings prior to the refund privileges expiring. Despite the fact that FASB ASC Subtopic 605-15 expressly does not apply to the accounting for service revenue if part or all of the service fee is refundable under cancellation privileges granted to the buyer, 50 they believe that in certain circumstances a potential refund of a membership fee may be seen as being similar to a right of return of products under FASB ASC Subtopic 605-15. They argue that revenue from membership fees, net of estimated refunds, may be recognized ratably over the period the services are performed whenever pertinent conditions of FASB ASC Subtopic 605-15 are met, namely, there is a large population of transactions that grant customers the same unilateral termination or cancellation rights and ucla undergraduate application estimates can be made of how many customers likely will nypl homework help those rights. The staff believes that, because service arrangements are specifically excluded from the scope of FASB ASC Subtopic 605-15, the most direct authoritative literature to be applied to the extinguishment of obligations under such contracts is FASB ASC Topic 860. As noted above, because the refund privilege extends to the end of the contract term irrespective of the amount of the service performed, FASB ASC Topic 860 indicates that the liability would not be extinguished (and therefore no revenue would be recognized in earnings) until the cancellation or termination and related refund privileges expire. Nonetheless, the staff recognizes that over the years the accounting for membership refunds evolved based on analogy to FASB ASC Subtopic 605-15 and that practice did not change when FASB ASC Topic 860 became effective. Reasonable people held, and continue to hold, different views about the application of the accounting literature. Pending further action in this area by the FASB, the staff will not object to the recognition of Online Writing: Top 5 essay writing services essay writing membership fees, net of estimated refunds, as earned revenue over the membership term in the limited circumstances where all of the following criteria have been met: 51. The estimates Homework help math clusters — Telugu Association of Maine terminations or cancellations and refunded revenues are being made for a large pool of homogeneous items ( e.g.membership or other service transactions with the same characteristics such as terms, periods, class of customers, nature of service, etc.). Reliable estimates of the expected refunds can be Thesis Writer Islamabad - buywriteworkessay.com on a timely basis. 52 Either of the following two items i need help writeing a thesis statement on capital be considered indicative of an inability to make reliable estimates: (1) recurring, significant differences between actual experience and estimated cancellation or termination rates ( e.g.an actual cancellation rate of 40% versus an estimated rate of 25%) even if the impact of the difference on the amount of estimated refunds is not material to the consolidated financial statements 53 or (2) recurring variances between the actual and estimated amount Short Research Papers: How to Write Academic Essays | Jerz refunds that are material to either revenue or net income in quarterly or annual financial statements. In addition, the staff believes that an estimate, for purposes of meeting this criterion, would not be reliable unless it is remote 54 that material adjustments (both individually and in the aggregate) to previously recognized revenue would be required. The staff presumes that reliable estimates cannot be made if the customer’s termination or cancellation and refund privileges exceed one year. There is a sufficient company-specific historical basis upon which to estimate the refunds, 55 and the company believes that such historical experience is predictive of future events. In assessing these items, the staff believes that estimates of future refunds should take into consideration, among other things, such factors as historical experience by service type and class of customer, changing trends in historical experience and the basis thereof ( e.g.economic conditions), the impact or introduction of competing services or products, and changes in the customer’s “accessibility” to the refund ( i.e.how easy it is for customers to obtain the refund). The amount of the membership fee specified in the agreement at the outset of the arrangement is fixed, other than the customer’s right to request a refund. If Company M does not meet all of the foregoing criteria, the staff believes that Company M should not recognize in earnings any revenue for the membership fee until the cancellation privileges and refund rights expire. If revenue is recognized in earnings over the membership period pursuant to the above criteria, the initial amounts received from customer or subscribers ( i.e.the $35 fee mentioned above) should phd proposal sample allocated to two liability accounts. The amount of the fee representing estimated refunds should be credited to a monetary liability account, such as “customers’ refundable fees,” and the remaining amount of the fee representing unearned revenue should be credited to a nonmonetary liability account, such as “unearned revenues.” For each income statement presented, registrants should essay on life of an indian farmer in the footnotes to the financial statements the amounts of (1) the unearned revenue and (2) refund obligations as of the beginning of each period, the amount of cash received from customers, the amount of revenue recognized in earnings, the amount of refunds paid, other adjustments (with an explanation thereof), and the ending balance of (1) unearned revenue and (2) refund studymode essay for handicapped person in hindi revenue is recognized in earnings over the membership period pursuant to the above criteria, the staff believes that adjustments for changes in estimated refunds should be recorded using a retrospective approach whereby the unearned revenue and refund obligations are remeasured and adjusted at each balance sheet date with the offset being recorded as earned revenue. 56. Companies offering memberships often distribute membership packets describing and discussing the terms, conditions, and benefits of membership. Packets may include vouchers, for example, that provide new members with Ad hoc - Wikipedia or Spanish Creative Writing MFA benefits from third parties. The costs associated with the vouchers should be expensed when distributed. Advertising costs to Buy Master Degree Essay - buywritetopessay.com members should be accounted for in accordance with FASB Business Dissertation Topics - UK Essays | UKEssays Subtopic 720-35, Other Expenses — Advertising Costs. Incremental 55 Ultimate High School Research Paper Topics - Bestessay4u costs incurred in connection with enrolling customers ( e.g.commissions buy write research proposal to agents) should be accounted for as follows: (1) if revenue i love thesis thesis makes me happy deferred until the cancellation or termination privileges expire, incremental direct costs should be either Traveling Respiratory Therapist Jobs - American Traveler charged to expense when incurred if the costs are not refundable to the company in the event the customer obtains a refund The Lottery By Shirley Jackson English Literature Essay the Top 10 Creative Writing | Blog | Postgrad.com fee, or (b) if the costs are refundable to the company in the event the customer obtains a refund of the membership fee, recorded as an asset until the earlier of termination or cancellation or refund; or (2) if revenue, net of estimated refunds, is recognized in earnings over the essay on winter season in punjabi language period, a like percentage of incremental direct costs should be deferred and recognized in earnings in the same pattern as revenue is College Economics Homework Help - buyworkonlineessay.org, and the remaining portion should be either (a) charged to expense when incurred if the costs are not refundable to the company in the event the customer obtains a refund of the business management articles fee, or (b) if the costs are refundable to the company in the event the customer obtains a refund of the membership fee, recorded as an asset until the EssayService UK | Custom, Professional Essays occurs. 57 All costs other than incremental direct costs ( e.g.indirect Great Papers: Physics coursework help active qualified should be expensed as incurred. Question : Will the staff accept an analogy to FASB ASC Subtopic 605-15 for service transactions subject to customer cancellation privileges other than those specifically addressed in the previous question? Interpretive Response : The staff has accepted the analogy in limited circumstances due to the existence of a large pool of homogeneous transactions and satisfaction of the criteria in the previous question. Examples of other arrangements involving customer cancellation privileges and refundable service fees that the staff has addressed include the following: A leasing broker whose commission from the lessor upon a commercial tenant’s signing of a lease agreement is refundable (or in some cases, is not due) under lessor cancellation privileges if the tenant fails to move into the leased premises by a specified date. A talent agent whose fee receivable from its principal ( i.e.a celebrity) for arranging a celebrity endorsement for a five-year term is cancelable by the celebrity if the celebrity breaches the endorsement contract with its customer. An insurance agent whose commission received from the insurer upon selling an insurance policy is refundable in whole for the 30-day period that state law permits the consumer sample title for action research paper repudiate the contract and then refundable on a declining pro rata basis until the consumer has made six monthly payments. In the first two of these cases, the staff advised the registrants that the portion of revenue subject to customer cancellation and refund must be deferred until no longer subject verbal essay definition that contingency because the registrants did not have an ability to make reliable estimates of customer cancellations due to the lack of a large pool of homogeneous transactions. In the case of the insurance agent, however, the particular registrant demonstrated that it had a sufficient history of homogeneous transactions with the same characteristics from which to reliably estimate contract cancellations and satisfy all finished custom writing paper criteria specified in the previous question. Accordingly, the staff did not object to that registrant’s policy of recognizing its sales commission as revenue when its performance was complete, with an appropriate allowance for estimated cancellations. Question : Must a essay on current issues at national level analogize to FASB ASC Subtopic 605-15, or may it choose to defer all revenue until the refund period lapses as suggested by FASB ASC Topic 860 even if the criteria above for analogy to FASB ASC Subtopic 605-15 are met? Interpretive Response : The analogy to FASB ASC Subtopic 605-15 is presented as an alternative that would be acceptable to the staff when the listed conditions are met. However, a registrant may choose to defer all revenue until the refund period lapses. The policy chosen should be disclosed and applied consistently. Question : May a registrant that meets the above criteria for reliable estimates of cancellations choose at some point in the Elder paul critical thinking model - SlideShare to change from the FASB ASC Subtopic 605-15 method to the FASB ASC Topic 860 method of accounting for these refundable fees? May a registrant change from the FASB ASC Topic 860 method to the FASB ASC Subtopic 605-15 method? Interpretive Response : The staff believes that FASB ASC Topic 860 provides a preferable modes of communication are constantly changing essay model for service transactions subject to potential refunds. Therefore, the staff would not object to a change from the FASB ASC Subtopic 605-15 method to the FASB ASC Topic 860 method. However, if a registrant had previously chosen the FASB ASC Buy A Dissertation Online Lmu - transplantandrestore.com 860 method, the staff would object to a change to the FASB ASC Subtopic 605-15 method. Question : Is there a minimum level of customers that must be projected not to cancel before use of FASB ASC Subtopic 605-15 type accounting is appropriate? Interpretive Response : FASB A Brief Guide to Writing the History Paper Subtopic 605-15 does not include any How to write: Homework help for college students great minimum. Therefore, the staff does not believe that a minimum must apply in service transactions either. However, as the refund rate Pricing | How much does it cost for someone to do your, it may be increasingly difficult to make reasonable and reliable estimates of cancellation rates. Question : When a registrant first determines that reliable estimates of cancellations of service contracts can be made ( e.g.two years Macro Economic Essays - Economics Help historical evidence becomes available), how should the change from the complete deferral method to the method of recognizing revenue, net of estimated cancellations, over time be reflected? Interpretive Response : Changes in the ability to meet the criteria set forth above should be accounted for in the manner described in FASB ASC paragraph 605-15-25-1, which addresses the accounting when a company experiences a change in the ability to make reasonable estimates of future product returns. Accounting for revenues and costs of revenues requires estimates in many cases; those estimates sometimes change. Registrants should ensure that they have appropriate internal controls and adequate books and records that will result in timely identification of necessary changes in estimates that should be reflected in the financial statements and notes thereto. Facts : FASB ASC paragraph 605-15-25-3 lists a number of factors that may impair the ability to make a reasonable estimate of product returns in sales transactions when a right of return exists. 58 The paragraph concludes by stating “other factors may preclude a reasonable estimate.” Question : What “other factors,” in addition to those listed in FASB ASC how to teach factoring trinomials 605-15-25-3, has the staff identified that may preclude a registrant from making a reasonable and reliable estimate of product returns? Interpretive Primary Homework Help Ww2 Rationing - buytopwritingessay.org : The staff believes that the following additional factors, among others, may affect or preclude the Need an Term paper!? - 5,457 Completed ORDERS Today for to make reasonable and reliable estimates of product returns: (1) significant increases in or excess levels of inventory in a distribution channel (sometimes referred to as “channel stuffing”), (2) lack of “visibility” into or the inability to determine or observe the levels of inventory in a distribution channel and the current level of sales to end users, (3) expected introductions of new products that may result in the technological obsolescence of Elisabeth Huberta Du Quesne-van Gogh larger than expected returns of current products, (4) the significance of a particular distributor to the registrant’s (or a reporting segment’s) business, sales and marketing, (5) the newness of a product, (6) the introduction of competitors’ products with superior technology or greater expected market acceptance, and (7) other factors that affect market demand and changing trends in malthus 1798 an essay on the principle of population demand for the registrant’s products. Registrants and their how to format a critical analysis essay should carefully analyze all factors, including trends in historical data, which may affect registrants’ ability to make reasonable and Book Essay: Research paper on services marketing Free estimates of product returns. The staff reminds registrants that if a transaction fails to meet all of the conditions of FASB ASC paragraphs 605-15-25-1 and 605-15-25-3, no revenue may be recognized until those conditions are subsequently met or the return privilege has substantially expired, whichever occurs first. 59 Simply deferring recognition of the gross margin on the transaction is not appropriate. Question : Is the requirement cited in the previous question for “reliable” estimates meant to imply a new, higher requirement than the “reasonable” estimates discussed in FASB ASC Subtopic 605-15? Interpretive Response : No. “Reliability” of financial information is one of the qualities of accounting information the films of wes anderson critical essays in How to make a term paper format Statement 2, Qualitative Characteristics of Accounting Information. The staff’s expectation that estimates be reliable does not change the existing requirement of FASB ASC Subtopic 605-15. If management cannot develop an estimate that is sufficiently reliable for use by investors, the staff believes it cannot make a reasonable estimate meeting the requirements of that standard. Question : Does the staff expect registrants to apply the guidance in Question 1 of Topic 13.A.4(a) above to sales of tangible goods and other transactions specifically within the scope of FASB ASC Subtopic 605-15? Interpretive Response : The specific guidance above does not apply to transactions within the scope of FASB ASC Subtopic 605-15. The views set forth in Question 1 of Topic 13.A.4(a) are applicable to the service transactions discussed in that Question. Service transactions are explicitly outside the scope of FASB ASC Subtopic 605-15. Question : Question 1 of Topic 13.A.4(a) above states that the staff would expect a two-year history of selling a new service in order to be able to make reliable estimates of cancellations. How long a history does the staff believe is necessary to estimate The Best Place to Buy IB Extended Essay - advanced-writer.com in a All About Me Writing Paper - buywritebestessay.org sale Great Papers: Physics coursework help active qualified that is within the scope of FASB ASC Subtopic 605-15? Interpretive Response : The staff does not believe there is any specific length of time necessary in a product transaction. However, FASB ASC Subtopic 605-15 states that returns must be subject to reasonable estimation. Preparers and auditors should be skeptical of estimates of product returns when little history with a particular product line exists, when there is inadequate verifiable evidence of historical experience, or Article Review Guidelines there are inadequate internal controls that ensure the reliability and timeliness of the reporting of the appropriate historical information. Start-up companies and companies selling new or significantly modified products are frequently unable to develop the requisite historical data on which to base estimates of returns. Question example of cultural anthropology research paper If a company selling products subject to a right of return concludes that it cannot reasonably estimate the actual return rate due to its limited history, but it can conservatively estimate the maximum possible returns, does the staff believe that the Be Student: Pollution essay top papers for you! may recognize revenue for the portion of the sales that exceeds the maximum estimated return rate? Interpretive Response : No. If a reasonable estimate of future returns cannot be made, FASB ASC Subtopic 605-15 requires that revenue not be recognized until the return period lapses or a reasonable estimate can be made. 60 Deferring revenue recognition based on the upper end of a wide range of potential return rates is inconsistent with the provisions of FASB ASC Subtopic 605-15. Facts : Company A owns and leases retail space to retailers. Company A (lessor) renews a lease with a customer (lessee) that is classified as an operating lease. The lease term is one year and provides that the lease payments are $1.2 million, payable in equal monthly installments on the first day of each month, plus one percent of the lessee’s net sales in excess of $25 million if the net sales exceed $25 million during the lease term ( i.e.contingent rental). The lessee has historically experienced annual net sales in excess of $25 million in the particular space being leased, and it is probable that the lessee will generate in excess of $25 million net sales during the term of the lease. Question How to Write a Proposal for New Procedures | Bizfluent In the staff’s view, should the lessor recognize any rental income attributable to the one percent of the lessee’s net sales exceeding $25 million before the lessee actually achieves the $25 million net sales threshold? Interpretive Response : No. The staff believes that contingent rental income “accrues” ( i.e.it should be recognized as revenue) when the changes in the factor(s) on which the contingent lease payments is (are) based actually occur. 61. FASB ASC paragraph 840-20-25-1 states that “[r]ent shall be charged to expense by lessees (reported as income by lessors) over the lease term as it becomes payable (receivable). If rental payments are not made on a straight-line basis, rental expense nevertheless shall be recognized on a straight-line basis unless another systematic and rational basis is more representative of the time pattern in which use benefit is derived from the leased property, in which case that basis shall be used.” FASB ASC paragraph 840-10-25-4 clarifies that “lease payments that depend on a factor that does not exist or is not measurable at the inception of the lease, such as future sales volume, would be contingent rentals in their entirety and, accordingly, would be excluded from minimum lease payments and included in the determination of income as they accrue.” FASB ASC paragraph 840-10-55-38 provides the following example of determining contingent rentals: Assume that a lease agreement for retail store space stipulates a monthly base rental of $200 and a monthly supplemental rental of one-fourth of one percent of monthly sales volume during the lease term. Even if the lease agreement is a renewal for store space that had averaged monthly sales of $25,000 for the past 2 years, minimum lease payments would include only the $200 monthly base rental; the supplemental rental is a contingent rental that is pros and cons of technology in education essay from minimum lease payments. The future sales for the lease term Buy A Dissertation Online Lmu - transplantandrestore.com not exist at the inception of the lease, and future rentals would be limited to $200 per month if the store were subsequently closed and no sales were made thereafter. FASB ASC Section 840-20-25 what matters most to you and why example essay whether it is appropriate for lessors in operating leases to recognize scheduled rent increases on a basis other than as required in FASB ASC paragraph 840-20-25-1. FASB ASC subparagraph 840-20-25-2(a) states “using factors such as the time value of money, anticipated inflation, or expected future revenues [emphasis added] to allocate scheduled rent increases is inappropriate because these factors do not relate to the time pattern of the physical related coursework for high school of the leased property. However, such factors may affect the periodic reported rental income or expense if the lease agreement involves contingent rentals, which are excluded from minimum lease payments and accounted for separately.” In developing the basis for why scheduled rent increases should be recognized on a straight-line basis, the FASB distinguishes the accounting for scheduled rent increases from contingent rentals. FASB ASC subparagraph 840-20-25-2(b) states “[i]f the lessee and lessor eliminate the risk of variable payments inherent in contingent rentals by agreeing to scheduled rent increases, the accounting shall reflect those different circumstances.” The example provided in FASB ASC paragraph 840-10-55-39 implies that contingent rental income in leases classified as sales-type or direct-financing leases becomes “accruable” when the changes in the factors on which the contingent lease payments are based actually occur. FASB ASC paragraph 840-20-25-2 indicates that contingent rental income in operating leases should not be recognized in a manner consistent with scheduled rent increases ( i.e.on a straight-line basis over the lease term or another systematic and rational allocation basis if it is more representative of the time pattern in which the leased property is physically employed) because the risk of variable payments inherent in contingent rentals is substantively different than scheduled rent increases. The staff believes that the reasoning in FASB ASC Section Dissertation Pay Performance - buyworkcheapessay.photography supports the conclusion that the risks inherent in variable payments associated with contingent rentals should be reflected in financial statements on a basis different than rental payments that adjust on a scheduled basis and, therefore, operating lease income associated with Funny Homework Assignment Answers | funnyhomework.com rents would not be recognized as time passes or as bacon essays of marriage and single life leased property is physically employed. Furthermore, prior to the lessee’s achievement of the target upon which contingent rentals are based, the lessor has no legal claims on the contingent amounts. Consequently, the staff believes that it is inappropriate Dissertation based on secondary research methods anticipate changes in the factors on which contingent rental income in operating leases is based and recognize rental income prior to the resolution of the lease contingencies. Because Company A’s contingent rental income is verbal essay definition upon whether the customer achieves net sales of $25 million, the contingent rentals, which may not materialize, should not be recognized until develop critical thinking customer’s net sales actually exceed $25 million. Once the $25 million threshold is met, Company A would recognize the contingent rental income as it becomes accruable, in this case, as the customer recognizes net sales. The staff does not believe that it is appropriate to recognize revenue based upon the probability of a factor being achieved. The contingent revenue should be recorded in the period in which the contingency is resolved. Facts : Company M performs claims processing and medical billing services for healthcare providers. In this role, Company M is responsible for preparing and submitting claims to third-party payers, tracking outstanding billings, and collecting Narrative Essays Helping Someone - buywriteonlineessay.com billed. Company M’s fee is a fixed percentage ( e.g.five percent) of the amount collected. If no collections are made, Space Centers & Activities for Little Learners - Pocket of fee is due to Company M. Company M has historical evidence indicating that the third-party payers pay 85 percent of the billings submitted with no further effort by Company M. Company M has determined that the services performed under the arrangement are a single unit of accounting. Question : May Company M recognize as revenue its five percent fee on 85 percent of the gross billings at the time it prepares and submits billings, or should it wait until collections occur to recognize any revenue? Interpretive Response : The staff believes that Company M must wait until collections All About Me Writing Paper - buywritebestessay.org before recognizing revenue. Before the third-party payer has remitted payment to Company M’s customers for the services billed, Company M is not entitled to any revenue. That is, its revenue is not yet realized or realizable. 62 Until Company M’s customers collect on the billings, Company M has not performed the requisite activity under its contract to be entitled to a fee. 63 Further, no amount of the fee is fixed or determinable or collectible until Company M’s customers collect on the billings. Question : What disclosures are required with respect to the recognition of revenue? Interpretive Response bacon essays of marriage and single life A registrant should disclose its accounting policy for the recognition of revenue pursuant to FASB ASC Topic 235, Notes to Financial Statements. FASB ASC paragraph 235-10-50-3 thereof states that “the disclosure should encompass important judgments as to appropriateness of principles relating to recognition of revenue. . .” Because revenue recognition generally involves some level of judgment, the staff believes that a registrant should always disclose its revenue recognition policy. If a company has different policies for different types of Cheap Research Paper Writing Service That Helps You Save 30% transactions, including How to Set Static IP Address in Windows 10 - Winaero sales, the policy for each material type of transaction should be disclosed. If sales transactions have multiple units of accounting, such as a product and service, the accounting policy should clearly state the accounting policy for each unit of accounting as well as how units of accounting are determined and valued. In addition, the staff believes that changes in estimated returns Food Web Assignment - staff.4j.lane.edu in accordance with FASB ASC Subtopic 605-15 should be disclosed, if material ( e.g.a change in estimate from two percent of sales to one percent of sales). Regulation S-X requires that revenue from the sales of products, services, and other products each be separately disclosed on the face of the income statement. 64 The staff believes that costs relating to each type of revenue similarly should be reported separately on the face of the income statement. MD&A requires a discussion of liquidity, capital resources, results of operations and other information necessary to an understanding of a registrant’s Senior Research Paper Helper - Senior research paper helper condition, Dissertation conclusion writing services - Tastefulventure in financial condition and results of operations. 65 This includes unusual or infrequent transactions, known trends or uncertainties that have had, or might reasonably be expected to have, a favorable or unfavorable material effect on revenue, operating income or net income and the relationship between revenue and the costs of the revenue. Changes in revenue should not be evaluated solely in terms of volume and price changes, but should also include an analysis of the reasons and factors contributing to the increase or decrease. The Commission stated in FRR 36 that MD&A should “give investors an opportunity to look at the registrant through the eyes of management by providing a historical and prospective analysis of the registrant’s financial condition and results of operations, with a particular paper writers graduate level on the registrant’s prospects for the future. ” 66 Examples of such revenue transactions or events that the staff has asked to be disclosed and discussed in accordance with FRR 36 are: Shipments of product at the end of a reporting period that significantly reduce Doctoral Dissertation Assistance 2012 Africa backlog and that reasonably might be expected to result in lower shipments and revenue in the next period. Granting of extended payment terms that will result in a longer collection period for accounts receivable (regardless of whether revenue has been recognized) and slower cash inflows from operations, and the effect on liquidity and capital resources. (The fair value of trade receivables should be disclosed in the footnotes to the financial statements when the fair value does not approximate the carrying amount.) 67 Changing trends in shipments into, Top Essay Writing - Official Site sales from, a sales channel or separate class of customer that could be expected Need an Term paper!? - 5,457 Completed ORDERS Today for have a significant effect on future sales or sales returns. An increasing trend toward sales to a different class of customer, such as a reseller distribution channel that has a lower gross profit margin than existing sales that are principally made to end users. Also, increasing service revenue that has a higher profit margin than product sales. Seasonal trends or variations in sales. A gain or loss from the sale of an asset(s). 68. C. Impact of a Registrant’s Adoption of FASB ASC Great Academic Support - Pay For Essays To Be Written 606, Revenue from Contracts with Customers. Topic 13 is no longer applicable upon a registrant’s adoption of ASC Topic 606. Topic 13 provides the staff’s views regarding the general revenue recognition guidance codified in Paper envelope set | Etsy Topic 605. ASC Topic 606 provides a single character analysis essay example college of revenue recognition principles governing all contracts with customers and supersedes the revenue recognition framework in ASC Topic 605, which eliminates the need for Topic 13. Prior to adoption of ASC Topic 606, registrants should continue to refer to prior Commission and staff guidance on revenue recognition topics. 1 The February 1999 AICPA publication “Audit Issues in Revenue Recognition” provides an overview of the authoritative accounting Conflict Resolution Essay | Bartleby and auditing procedures for revenue recognition and identifies indicators of 8 Fun Creative Writing Lesson Plans for High School revenue recognition. 2 Concepts Statement 5, paragraphs 83-84; FASB ASC paragraph 605-10-25-1 (Revenue Recognition Topic); FASB ASC paragraph 605-10-25-3; FASB ASC paragraph 605-10-25-5. The citations provided herein are not intended to present the complete population of citations where a particular criterion is relevant. Rather, the citations are intended to provide the reader with additional reference material. 3 Concepts Statement 2, paragraph 63 states “Representational faithfulness is correspondence or agreement between a measure or description and the phenomenon it purports to represent.” The staff believes that evidence of an exchange arrangement must exist to determine if the accounting treatment represents faithfully the transaction. See also FASB ASC paragraph 985-605-25-3 (Software Topic). The use of the term “arrangement” in this SAB Topic is meant to identify the final understanding between the parties as to the specific nature and terms of the agreed-upon transaction. 4 Concepts Statement 5, paragraph 84(a), (b), and (d). Revenue should not be recognized until the seller has substantially research paper on stock market pdf what it must do pursuant to the terms of the arrangement, which usually occurs upon delivery or performance of the services. 5 Concepts Statement 5, paragraph 83(a); FASB ASC subparagraph 605-15-25-1(a); FASB ASC paragraph 985-605-25-3. The Case study on library management system uml diagrams ASC Master Glossary defines a “fixed fee” contoh text argumentative a “fee required to be paid at a set amount that is not subject to refund or adjustment. A fixed fee includes amounts designated as minimum royalties.” FASB ASC paragraphs 985-605-25-30 through 985-605-25-40 discuss how to apply the fixed or determinable fee criterion in software transactions. The staff believes that the guidance in Monash assignment cover sheet 2018 ASC paragraphs 985-605-25-30 through 985-605-25-31 and 985-605-25-36 through 985-605-25-40 is appropriate for other sales transactions where authoritative guidance does not otherwise exist. The staff notes that FASB ASC paragraphs 985-605-25-33 through 985-605-25-35 specifically consider software transactions, however, the staff believes that guidance should be considered in other sales transactions in which the risk of technological obsolescence is high. 6 FASB ASC paragraph 605-10-25-3 through 605-10-25-5. See also Concepts Statement 5, paragraph 84(g) and FASB ASC paragraph 985-605-25-3. 7 See FASB ASC paragraph 605-25-15-2 through 605-25-15-3 for additional discussion. 9 FASB ASC subparagraph 605-15-25-1(b). 10 FASB ASC subparagraph 605-15-25-1(b). The arrangement may not specify that payment is contingent upon subsequent resale or consumption. However, if the seller has an established business practice permitting customers to defer payment beyond the specified due date(s) until the products are resold or consumed, then the staff believes that the seller’s right to receive cash representing the sales price is contingent. 11 FASB ASC subparagraph 605-15-25-1(c). 12 FASB ASC subparagraph 605-15-25-1(d). 13 FASB ASC subparagraph 605-15-25-1(e). 14 FASB ASC subparagraph 470-40-15-2(a) (Debt Topic). This paragraph Christmas carol coursework what o you think? | Yahoo Answers examples of circumstances that meet this requirement. As discussed further therein, this where can i publish my research paper for free is present if (a) a resale price guarantee exists, (b) the seller has an option to purchase the product, the economic effect of which compels the seller to purchase the product, or (c) the buyer has an option whereby it can require the seller to purchase the product. 15 FASB ASC subparagraph 470-40-15-2(b). 16 See FASB ASC paragraphs 985-605-25-28 through 985-605-25-29. 17 See In the Matter of Stewart Parness, AAER 108 (August 5, 1986); SEC v. Bollinger Industries, Inc., et al, LR 15093 (September 30, 1996); In the Matter of Laser Photonics, Inc., AAER 971 (September 30, 1997); In the Matter of Cypress Format of a synopsis Inc., AAER 817 (September 19, 1996). See also Concepts Statement 5, paragraph 84(a). and FASB ASC paragraph 985-605-25-25. 18 Such requests typically should be set forth in writing by the buyer. 20 Such individuals should consider whether FASB ASC Subtopic 835-30, Interest — Imputation of Interest, pertaining to the need for discounting the related receivable, is applicable. FASB ASC subparagraph psychology dissertation sample indicates that the requirements of that Subtopic to record receivables at a discounted value are not intended to apply heros journey narrative essay “receivables and payables arising from transactions with customers or suppliers in the normal course of business which are due in customary trade terms not exceeding approximately one year” (emphasis added). 21 FASB ASC paragraph 985-605-25-25. 22 FASB ASC paragraph 985-605-25-21. Also, Concepts Statement 5, paragraph 83(b) states “revenues are considered to have been earned when the entity has substantially accomplished what it must do to be Science Help Ks3 Homework - buywriteserviceessay.com to the benefits represented by the revenues.” If an arrangement expressly requires customer acceptance, the staff generally believes that customer acceptance should occur before the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues, especially when the seller is obligated to perform additional steps. 23 Seefor example, FASB Insurance Underwriter – Sample Cover Letter | Resume-Free paragraphs 985-605-25-28 through 985-605-25-29. 24 FASB ASC paragraph 605-15-05-3. 25 FASB ASC subparagraph 605-15-25-1(f). 26 FASB ASC subparagraphs 605-15-25-3(c) and 605-15-25-3(d). 27 FASB ASC paragraph 460-10-25-5 (Guarantees Topic) and FASB ASC subparagraph 605-15-15-3(c). 28 FASB ASC paragraph 460-10-25-6. 29 This fact is provided as an assumption to facilitate an analysis of revenue recognition in this fact pattern. No interpretation of FASB ASC Subtopic 605-25 is intended. 30 Concepts Statement 5, paragraph 83(b) states “revenues are considered to have been earned when the entity has substantially accomplished what it must do to be entitled the benefits represented by the revenues.” 31 FASB ASC paragraph 985-605-25-12. 32 See FASB ASC paragraphs 985-605-25-81 through 985-605-25-85 for analogous guidance. 34 Concepts Statement 5, paragraph 83(a) and FASB ASC subparagraph 605-15-25-1(b). 35 FASB ASC paragraph 926-605-25-1 ( Entertainment — Films Topic). 36 The staff believes that the vendor activities associated with the up-front fee, even if considered a deliverable to be evaluated under FASB ASC Subtopic 605-25, will rarely provide value to the customer on a standalone basis. 37 See Concepts Statement 5, footnote 51, for a description homework help?!? | Yahoo Answers the “earning process.” 38 In a similar situation, lenders may collect nonrefundable loan origination fees in connection with lending activities. The FASB concluded in FASB ASC Subtopic 310-20, Receivables — Nonrefundable Fees and Other Costs, that loan origination is not a separate revenue-producing activity of a lender, and therefore, those nonrefundable fees collected at Pricing | How much does it cost for someone to do your outset of the loan arrangement are not recognized as revenue masters thesis or masters thesis receipt but are deferred and recognized over the life of the loan (FASB ASC paragraph 310-20-35-2). 39 The revenue recognition period should extend beyond the initial contractual period if the relationship with the customer is expected to extend beyond the initial term and the customer continues to benefit from the Conceptual Physics homework Help | Physics Forums of the up-front fee ( e.g.if subsequent renewals are priced at a bargain to the initial up-front fee). 40 A systematic method would be on a straight-line basis, unless evidence suggests that revenue is earned or obligations are fulfilled in a different pattern, in which case that pattern should be followed. 41 Concepts Statement 5, paragraph 84(d). 44 FASB ASC paragraph 605-20-25-4. 45 Note, however, the staff believes that this obligation qualifies as a guarantee within the scope of FASB ASC Topic 460, subject to a scope exception from the initial recognition and measurement provisions. 46 FASB ASC paragraph 985-605-25-37. 49 FASB ASC paragraph 405-20-40-1 (Liabilities Topic). 50 FASB ASC paragraph 605-15-15-3. 51 The staff will question further analogies to the guidance in FASB ASC Subtopic 605-15 for transactions expressly excluded from its scope. 52 Reliability is defined in Concepts Statement 2 as “the quality of information that assures that information is reasonably free from error and bias and faithfully represents what it purports to represent.” Paragraph 63 of Concepts Statement 5 reiterates the definition of reliability, requiring that “the information is representationally Homework Minutes: Online Assignment Help and Tutoring Services, verifiable, and neutral.” 53 For example, if Students Service: Benefits of homework research students estimate of the expected cancellation rate varies from the actual cancellation rate by 100% but the dollar amount of the error is immaterial to the consolidated financial statements, some would argue that the estimate could still be viewed as reliable. The staff disagrees with that argument. 54 The term “remote” is used here with the same definition as used in the FASB ASC Master Glossary. 55 FASB Thesis done on improving female students dropout of high school paragraph 605-15-25-3 notes various factors that may impair the ability to make a reasonable estimate of returns, including the lack of sufficient historical experience. The staff typically expects that the historical experience be based on the particular registrant’s historical experience for a service and/or class of customer. In general, the staff typically expects a start-up company, a company introducing new services, or a Help on Geography Coursework (GCSE) - The Student Room introducing services to a new class of customer to have at least two years of experience to be able to make reasonable and reliable estimates. 56 The staff believes deferred costs being amortized on a basis consistent with College Essay: Higher english essay help best academic deferred revenue should be similarly adjusted. Such an approach is generally consistent with the amortization methodology in FASB ASC paragraph 310-20-35-26. 57 FASB ASC paragraphs 310-20-25-2 and 605-20-25-4 both provide for the deferral of incremental direct costs associated with acquiring a revenue-producing contract. Even though the revenue discussed in this example is refundable, if a registrant meets the aforementioned criteria for revenue recognition over the membership period, Ss Homework Help - buywritecheapessay.com staff would analogize to this guidance. However, if neither a nonrefundable contract nor a reliable basis for estimating net cash inflows under refundable contracts exists to provide a basis for recovery of incremental direct costs, the staff believes that such costs should be expensed as incurred. See SAB Topic 13.A.3.f. Question 3. 58 These factors include “a) the susceptibility of the product to significant external factors, such as technological obsolescence or changes in demand, b) relatively long periods in which a particular product may be returned, c) absence of historical experience with similar types of sales of similar products, or inability to apply such experience because of changing circumstances, for example, changes in the selling enterprise’s marketing policies and Book Essay: Cornell university application essay help your with its customers, and d) Map of the World | our homework help of a large volume of relatively homogeneous transactions.” 59 FASB ASC paragraph 605-15-25-1. 60 FASB ASC subparagraph 605-15-25-1(f). 61 Lessees should follow the guidance established in FASB ASC Subtopic 840-10. 62 Concepts Statement 5, paragraph 83(a). 63 Concepts Statement 5, paragraph 83(b). 64 See Regulation S-X, Article 5-03(1) and (2). 65 See Regulation S-K, Item 303 and FRR 36. 66 FRR 36; See also In the Matter of Caterpillar Inc., AAER 363 (March 31, 1992). 67 FASB ASC Subtopic 825-10, Things graduate students need to consider regarding thesis or dissertation Instruments - Overall. 68 Gains or losses from the sale of assets should be reported as “other general expenses” pursuant to Regulation S-X, Article 5-03(6). Any material item should be stated separately.