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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: ciVic who wrote (67602)	1/26/2000 5:23:00 PM
From: vampire	Respond to of 108040

If I may.... The FASB realizes that there have to be different standards for different industries. There is a "percentage completed" method of recognizing revenue that would apply to the shipbuilding industry. I hope this helps

To: ciVic who wrote (67602)	1/26/2000 5:29:00 PM
From: swisstrader	Read Replies (2) \| Respond to of 108040

CiVic...you are comparing apples to oranges here...one business delivers finished goods (DELL), while a shipbuilder is a work-in-progress business (% complete)...you must understand that the AICPA has very specific rules for hardware and software vendors to prevent people from sandbagging and telling investors, etc. that they killed their numbers with bogus orders...do you seriously think that they can lay claim to revenues with PROMISES of an order?...the rules are there to protect you, the shareholder!!

To: ciVic who wrote (67602)	1/26/2000 5:48:00 PM
From: WhatsUpWithThat	Read Replies (1) \| Respond to of 108040

[...]all depends on the kind of business you do...and therefore it is up to the company to match revenues to expenses so the balance sheet looks decent I agree with the first part of this, and the second part WITHIN THE BOUNDS OF GAAP... Major projects, such as the ship you described, are typically treated as a percent complete or a milestone basis. You 'sold' the ship when you signed the contract, which is a major item in whether or not you'll be allowed to recognize revenue as you complete the project. If instead you were building it on spec but were 'sure' you had a sale at the end, you could recognize nada until it was sold and delivered. PCs and other commodity, inventoried or assemble-to-order product, would come under the 'recognize when you ship' method. And if you REALLY want to get picky, charging Mogul's credit card would have no effect on this anyway: money received before revenue is recognized is treated as unearned revenue and doesn't appear on the income statement. Probably more than enough on this somewhat arcane and doubtless very boring topic for others on this thread, though it has lately been a topic of considerable interest to the SEC given companies that have had to restate because they'd been too aggressive on revenue recognition...to a very very sad effect on their stock price. It is particularly open to, ummmm, misinterpretation and misuse on software and service revenues. Cheers WUWT