ACTG 3000 Chapter Notes - Chapter 3: Revenue Recognition, Earnings Management, Financial Statement
Document Summary
Research and development (r & d: classification of development costs, reliability measured, future economic benefits. Revenue recognition: risks and rewards of ownership transferred, sale price is agreed, assurance of payment. Accounting for receivables: financing of fiat cars, long term receivables, accounting choices for long term receivables, development costs are capitalized, revenue is recognized from buyback transactions, recognition of long term receivables. Ma(cid:374)age(cid:373)e(cid:374)t"s discretion on liability/expense recognition and aggressive revenue recognition: revenue from buyback recognized at contract date, dominance of legal ownership rather than economic ownership. Conservative treatment for revenue recognition and duly recognizes liabilities. Gaap: recognition occurs on legal and contractual form. Ifrs: recognition occurs when risks and rewards are substantially transferred. Consolidation of spes (special purpose entities) and subsidiaries. Gaap: subsidiaries with dissimilar activities excluded; accounted for using equity method. Capitalize only if asset recognition is met. Derivative fair value (fv) revolves around the inventory hedges. Fv of inventory hedges determines the carrying value of derivatives.
