Xanetics, Inc., recently received a $ 150,000 special order from Lartech, Inc., for some customized equipment. A 50 percent deposit accompanied the order, with the remaining $ 75,000 payment to be made at delivery. Xanetics manufactured the equipment and was ready to ship it to Lartech when it was notified that Lartech had declared bankruptcy.
Required
Identify the accounting issues related to the above scenario. Has Xanetics earned revenue? Has it been realized? Should the company recognize any revenue?