A company believes that it is subject to scrutiny by particular interest groups such as employee unions because it is earning excessive profits. Do you think that this might influence whether the company prefers to recognise revenue over time for its construction contracts, or whether it would prefer to defer profit recognition until the completion of the project? Using this case, discuss whether it be appropriate to recognise revenue at completion of production rather than at the point of sale?

A company believes that it is subject to scrutiny by particular interest groups such as employee unions because it is earning excessive profits. Do you think that this might influence whether the company prefers to recognise revenue over time for its construction contracts, or whether it would prefer to defer profit recognition until the completion of the project? Using this case, discuss whether it be appropriate to recognise revenue at completion of production rather than at the point of sale?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 4C: One of the more difficult issues that companies face in recognizing revenue is determining the...

See similar textbooks

Similar questions

Please explain this question in detail as much as you can and provide refrences / sources of the content Thank you so much in advance experts Question : A company believes that it is subject to scrutiny by particular interest groups such as employee unions because it is earning excessive profits. Do you think that this might influence whether the company prefers to recognise revenue over time for its construction contracts, or whether it would prefer to defer profit recognition until the completion of the project? Using this case, discuss whether it be appropriate to recognise revenue at completion of production rather than at the point of sale?
Please solve this question in detail and please provide atleast 1 refrence Question : A company believes that it is subject to scrutiny by particular interest groups such as employee unions because it is earning excessive profits. Do you think that this might influence whether the company prefers to recognise revenue over time for its construction contracts, or whether it would prefer to defer profit recognition until the completion of the project? Using this case, discuss whether it be appropriate to recognise revenue at completion of production rather than at the point of sale? (word limit 500)
Is it an entity inherent risk for a president of a company to review product costs and adjusts the authorized selling prices of products, as necessary? He makes the selling price adjustments based on his assessment of what his competitors will do with pricing and what is required to provide competitive profits to the owners of Marco. If it is an inherent risk, describe the feature of the firm that will possibly affect inherent risk and explain how and why; that is whether it increases or decreases inherent risk. Please address a specific risk to the accuracy of the financial statements with the "how" and whether audit effort should be increased or decreased for specific accounts or related groups of accounts if possible.
Regulators may impose political costs on firms. However, there are ways that some firms practice to minimise such costs. Discuss with examples.
Some argue against corporate involvement in socially responsible behavior because the costs incurred by such behavior place the organization at a disadvantage in a competitive market. Discuss the merits and flaws of this argument.
Which statement is incorrect regarding recognition of employee benefits? a. The enterprise should recognize the expected cost years of service. of profit-sharing and bonus payments when, and only when, it has a legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the expected cost can be made b. For short-term employee benefits, the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period should be recognized in that period. c. The cost of providing employee benefits should be recognized in the period in which the benefit is earned by the employee, rather than when it is paid or payable. d. For post-employment benefits, the cost to be recognized in the period is the contribution payable in exchange for service rendered by employees during the period.
Describe an adverse selection problem a company is facing. What is the source of the asymmetric information? Who is the less informed party? What transactions are not being consummated as a result of the information? Could you (or do you) use signaling or screening to consummate these transactions? Offer your company some sound advice, complete with computations of the attendant profit consequences.
The restriction that manufacturers should not market a new product that is legally similar to that of another company's product is due to which public policy instrument? a. Copywrite b. Minimum standards for product warranties c. Anti- merger laws d. Patent laws
One of the more difficult issues that companies face in recognizing revenue is determining the transaction price. In cases where the consideration in a contract includes a variable amount, an entity should estimate the amount of consideration to which it is entitled in exchange for transferring the promised goods or services. Required: Discuss the methods a company may use to estimate variable consideration and the situations in which one method may he preferred over another.
Which of the following would be best considered to be an agency conflict problem in the behavior of the following financial managers? pack to later. O A. Bill chooses to pursue a risky investment for the company's funds because his compensation will substantially rise if it succeeds. O B. Sue instructs her staff to skip safety inspections in one of the company's factories, knowing that it will likely fail the inspection and incur significant costs to fix. OC. Michael chooses to enhance his firm's reputation at some cost to its shareholders by sponsoring a team of athletes for the Olympics. O D. James ignores an opportunity for his company to invest in a new drug to fight Alzheimer's disease, judging the drug's chances of succeeding as low. stv MacBook Air DII DD 888 F9 20 F7 F8 F6 F5 F4 esc F2 F3 F1 &
In which of the following situations is a company most likely to benefit from implementing ABC? When the company operates in an environment where the risk of cost distortion is high. When the company already has the necessary accounting and technological expertise in place. When the company has very few competitors. When the company produces and sells a single product.
Which of the following statements is false with respect to replacement analysis? a. Functional obsolescence is the only type of obsolescence that should be considered in a replacement analysis. b. A changing external environment can lead to the need for a replacement analysis. c. Companies frequently use equipment long after a replacement would be economically justified. d. In a replacement analysis, the current asset is referred to as the defender.