Hoang Thi Thanh Ha - 13200154 Case 14-3 Coconut Telegraph 1. Is Coconut’s February 1, 2012, arrangement with Buffett within the scope of ASC 985-605? ASC 985 -605 Software — Revenue Recognition “provides guidance on when revenue should be recognized and in what amounts for licensing, selling, leasing, or otherwise marketing computer software.” It defines “ Software arrangements range from those that provide a license for a single software product to those that, in addition to the delivery of software or a software system, require significant production, modification, or customization of software.” (ASC 985-605-05-3 ). And the Scope and Scope exception is in ASC 985-605-15 (The Scope in 985-605-15-13 and Scope exception 986-605-15-14) …show more content…
Moreover, to the extent that a discount exists, the residual method described in paragraphs 985-605-25-10 through 25-11 attributes that discount entirely to the delivered elements. So Arrangement with Buffett is a multiple elements arrangement. And at Feb 1st, 2012, The Fair Value of Customer Management system was $12,000 and One year of PCS was $2,000, while Buffett paid $12,000 to both. Coconut gave a discount in the multiple-element arrangement, to recognize revenues; we have to allocate the value of each element base on Fair value of it. As February 1st 2012, Fair Value % Allocated discount Allocated arrangement consideration System $ 12,000 85.71% (1,714) $10,286 PCS 2,000 14.29% (286) 1,714 Total $ 14,000 100% (2,000) $12,000 As April 30th, 2012, Coconut would had The cumulative revenues recognized : + Volcano Systems: $10,286 + 2 months of PCS: $286 ( $1,714 X 2/12 = $286) Total revenue recognized: $10,572 Deferred revenue: 10 months of PCS $1,428 ( $1,714-286=1,428) 3. Should the February 1, 2012, agreement and the May 1, 2012, agreement be accounted for separately or as a single arrangement? To determine these agreements should be accounted for separately or as a single arrangement, we would consider in ASC 605-25 Revenue Recognition to Multiple-elements agreements As ASC 605-25-25-3 Units of Accounting In applying the guidance in this Subtopic, separate contracts with the same entity or related parties that are entered into at or near the same time are
* Partial Revenue Recognition method would recognize the sale and extended warranty at the time of sale. And the rest of the contract revenue will be deferred and recognized when the contract period is complete. This method is acceptable for financial reporting in few situations. The calculation is based on the estimated cost of the product and extended warranty. This method allows the company to recognize most of the revenue at the time of sale, and allows some future revenue recognition.
The United States Court of appeals ruled that the suppressed evidence is purely impeaching evidence and no defense request has been made, the suppressed evidence is material only if its introduction probably would have resulted in acquittal. Given a minor role of Phillips' testimony and the limited impact that Phelps statement had on the jury's assessment of Phillips credibility, Maddox could not demonstrate that so the evidence probably would have resulted in an acquittal. Also, the evidence was immaterial under United States V.Blasco; the defendant filed a joint motion to suppress all physical evidence gathered by the officers and any statements made by the defendant. The magistrate found that the defendant did not have to raise a fourth amendment challenge and its suppression did not violate his (Maddox’s) due process right. For ongoing reasons, the district court's dismissal of Maddox's habeas petition was affirmed.
Sparkle Company is a Nigerian diamond mining company. Sparkle is a joint venture, 50 percent owned by Shine and 50 percent owned by Brighten. Both Shine and Brighten are U.S.-based companies with their functional currency being the American dollar. Sparkle Companies functional currency is that of Nigeria, being the Naira. During 2009, Sparkle had several transactions with its joint venture owners and outside parties. The details of Sparkle’s transactions are three loans, three expenditures, and one revenue stream. The loans the company took out were $1 million from Brighten, $1 million from Shine, and 300 million Naira from a local Nigerian bank. The expenditures
Recognizing revenue on October 2, on the day of the event, is reasonable because now, performance has occurred and all of the risk and rewards have been transferred to the corporation holding the event. Revenue is measurable because the price was already set ($60,000) at the time when the contract was signed. Cost is measurable because the event has already occurred and the case states that DCL has incurred cost of $44,000 on the day of the event. Assuming that collectability is reasonably assured due to the size of the event, this method will cause revenue to be recognized in the fiscal period ended on September 30, 2016.
ASC 320-10-35-33F: “Changes in the quality of the credit enhancement should be considered when estimating whether a credit loss exists and the period over which the debt security is expected to recover.”
This case is talking about an executive retreat. It was introduced by John Matthews who was a executive had been selected to attend the two-and-a-half-week retreat. The retreat was more like a competition about academic and athletic. The team members should not only get know each other and cooperate with teammates but also need to compete with others. The whole participants were broken into five groups and their aim was to win the competition. There are several sessions about academic and athletic that the participants should complete. After the introduction part the case showed the experience of John. Before the group meeting John was wondering and worried about this retreat. When he was taking the first group meeting, he tried to learn
3. Should the February 1, 2012, agreement and the May 1, 2012, agreement be accounted for separately or as a single arrangement?
v. This is applicable to our case because the negotiation and contract signing payments can be considered arrangement considerations because the payments are fixed and therefore, should be allocated over the three
* The delivered item or items have value to the customer on a standalone basis, which is satisfied in this case.
3.) . Should the February 1, 2012, agreement and the May 1, 2012, agreement be accounted for separately or as a single arrangement?
On a snowy January evening, the Midwestern Medical Group (MMG) management team held a retirement party for Judith Olsen, MMG president. During the evening, Olsen reflected back on the years she had worked for MMG with mixed feelings about her experience. Over the course of their eight-year integration
If it is not clear whether an arrangement for payments to employees or selling shareholders is part of the exchange for the acquiree or is a transaction separate from the business combination, the acquirer should consider the following indicators:
Shakespeare Inc., a private publishing company issued its F/S on March 20, 2012. There were several accruals and events that the management of Shakespeare is considering to determine if they should be recognized or disclosed in Dec 31, 2011 F/S. In my opinion, the important things to focus on subsequent events are the period they effect and if their influence is material or not, so that in conclusion, the F/S are fairly presented.
Chick-fil-A is known for their famous Chick-fil-A sandwich, but also for their private, family –controlled ownership structure, philosophy on management and biblical principles. Chick-fil-A uses the differentiation strategy to set them apart from other fast-food chains. Chick-fil-A mission was “To glorify God by being faithful steward of all that is entrusted to us and to have a positive attitude influence on all who come in contact with Chick-fil-A”, and to be “America’s best quick-serve restaurant.” One of their strategies they use to set them apart was focusing on people. This strategy included interview process, golden rule, consistent
arrangements must be identified and can be recognized as either a single contract with multiple deliverables or a compilation of individual contracts for one customer. SKI’s general advertising services involve multiple arrangements since each contract they make is tailored to meet the needs of individual clients. The potential issue concerning SKI’s advertising revenues involves the facts that these sales agents are given significant latitude in securing these contracts. This creates many differences among the contracts and raises the issue on how SKI is supposed to recognize the revenues from their contracts that all have varying terms. Following ASC 605-50-25-3,7; Guidance characterizes these contracts that are substantially different as multiple deliverables and that the consideration of these arrangements must be allocated to the deliverables as separate units of accounting. This allocation is done by determining a relative sales price for the nature of the arrangements and to allocate them respectively. Kristine Drew could recommend that SKI could