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SEC Accounting and Auditing Enforcement Release (AAER) No. 108 specifies certain conditions or criteria that a bill and hold transaction of a public company should meet in order to qualify for revenue recognition. The AAER also specifies certain factors that should be considered in evaluating whether a bill and hold transaction meets the requirements for revenue recognition. AAER No. 108 state that a "bill and hold" transaction should meet the following conditions:•The risks of ownership must have passed to the buyer.•The customer must have made a fixed commitment to purchase the goods, preferably reflected in written documentation.•The buyer, not the seller, must request that the transaction be on a bill and hold basis, The buyer must have a substantial business purpose for ordering the goods on a bill and 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.•The equipment must be complete and ready for shipment.Required:1.Discuss why a buyer may want to order on a bill and hold basis. Why might a seller want to classify an order as bill and hold if it does not meet the above criteria?2.Identify and discuss the reliability of the types of evidence an auditor would need to determine whether each condition cited above was met for a bill and hold transaction.
Sparrow Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $8.00 a unit. The unit cost for Sparrow Co.
What are some important aspects of the decision that do not have to do with the price of gasoline and the $4,500 discount?
Capius Corporation issued 2000 bonds in $1000 individual denominations. Each bond has twenty detachable warrants. The bonds and warrants were sold at 110. At the time the bond were issued each warrant had a market value to one percent of the face ..
Briefly describe each of the generally accepted auditing standards and indicate how the action(s) of Jones resulted in a failure to comply with each standard. Use the table below to present your answers.
The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?
The amount of unrealized intercompany profit which should be eliminated in the consolidation process at the end of 2006 is:
What is the purpose of the chart of accounts? Why are internal controls and audit trails important in a computerized accounting system?
The charter of a corporation provides for the issuance of 109000 shares of common stock. Assume that 59000 shares were originally issued and 4700 were subsequently reacquired. What is the number of shares outstanding?
Messersmith Company is constructing a building. Construction began in 2010 and the building was completed 12/31/10. Messersmith made payments to the construction company of $1,000,000 on 7/1, $2,100,000 on 9/1, and $2,000,000 on 12/31. Average acc..
Cooper Corporation purchased a special tractor on December 31, 2012. The purchase agreement stipulated that Fishbone should pay $25,600 at the time of purchase and $7,700 at the end of each of the next 11 years. The tractor should be recorded on D..
What are the advantages and disadvantages of the primary types of auditor? Please explain the advantages and disadvantages of each one.
Discuss the treatment of Barb"s investment interest that is disallowed in 2006. What election could Barb make to increase the amount of her investment interest deduction for 2006? 205.
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