Amanda, Inc. manufactures and packages drugs for humans and sells the products to channel pharmaceutical companies. The company has long-term contracts with their channel partners which supposedly allow the recognition of income after meeting certain requirements (e.g., successfully passing quality inspection). During the pandemic Amanda was highly successful, but the demand for their products was reduced at the end of the pandemic. A lawsuit argues that the company overstated its revenue by $468 million. Amanda’s 2022 fiscal year Form 10-K explains its surge in the Control Liability Account: Contract assets primarily relate to the Company's conditional right to receive consideration for development services that have been performed for a customer as of June 30, 2022, but had not yet been invoiced as of June 30, 2022. Contract assets are transferred to trade receivables, net when the Company’s right to receive the consideration becomes unconditional. Contract assets totaled $441 million and $181 million as of June 30, 2022, and 2021, respectively. Contract assets expected to transfer to trade receivables within 12 months are accounted for within Prepaid expenses and other. Contract assets expected to transfer to trade receivables longer than 12 months are accounted for within Other long-term assets.

You are hired by the law firm of the plaintiff or defendant. Pick one side and prepare a memo for the attorney that hired you as an accounting consultant.  

Answer rating: 100% (QA)

ANSWER To Attorneys Name Subject Analysis of Amanda Incs Financial Statements in relation to the 468 million Lawsuit As an accounting consultant hired by your law firm I have reviewed Amanda Incs 2022 ... View the full answer