ACTG 2011 Lecture Notes - Lecture 6: Revenue Recognition, Equity Method
Document Summary
Long run: want the business to be successful. Conflict: differences btw short term and long term goals (although they do complient each other. Constraints: privately owed, so they can pick ifrs or aspe. >recommend ifrs b/c approaching gov. and if they need future financing from the bank/investors. Immediate goal: beneficial to treat as a liability. Although they aren"t exercising their right, they did not give it away (can use it if they choose to) 1: significant influence or control, which method do we use. Use equity method increase income (fits into longterm goal) can have negative impact on gov loan. Options recognize 5 upfront/at end/month by month(over 12 or 24 months, no guarantee) Recognize 1 m 1st year: upfront/month by month. 2nd year month by month / at end (cannot recognize upfront, uncertainty) Risk transferred once logo is painted (performance occurred. Can argue that rewards are the customers seeing the plance, performance occurs as this is satisfied.
