Read the accounting case study, "Bridging the 'New Gap' in the Upcoming 10-K"

 

Read the case study paying attention to the accounting guidelines, the likely changes the new revenue recognition standard will require, and the potential impact of those changes on patterns of revenue recognition. Then answer the following questions:

1. How is revenue defined? What event triggers its recognition?
2. Do the changes present a reasonable measure of the revenue earned by businesses during their reporting period?
3. What do you feel necessitated the change? Do you think the changes in reporting will be successful? Why or why not?
4. How is the proposed change consistent with revenue measures expected in business today?
5. In your opinion, how do you feel the upcoming changes will affect companies subject to industry-specific revenue recognition and the significant alteration in reporting revenue?
6. Will the new Revenue Recognition Standard provide more useful decision-making information than previously reported? Why or why not?
7. Why is it important to keep the audit committees informed of changes in revenue recognition guidelines and policies?
8. Many regulatory bodies such as the Financial Accounting Standards Board (FASB) and SEC mandate disclosures for business reporting. What is the definition of a disclosure as it relates to financial statements and why are they important to investors? Do you feel they are necessary—why or why not?

Answer rating: 100% (QA)

Revenue recognition principles and accounting standards 1 Definition of Revenue and Recognition Trigger Revenue is typically defined as the income generated from the sale of goods or services in the n... View the full answer