(a) Define and describe each of the following methods of revenue recognition, and indicate whether each is in accordance with generally accepted accounting principles.
- Point of sale, - Completion-of-production, - Percentage-of-completion. - Installment-sales.
(b) Calculate the revenue to be recognized in fiscal year 2012 for each division of Patty Corporation in accordance with generally accepted accounting principles. Show all calculations for full credit. This means revenue only and not Gross Margin.
GENERAL REVENUE RECOGNITION CRITERIA (for GAAP analysis)
Source: http://www.pearsoned.ca/highered/showcase/kinlo/pdf/04_lo_ch04.pdf, retrieved Mar 4, 2013
(a) All ownership is now with the purchaser
(b) This is no seller involvement or control of the goods sold;
(c) The revenue is considered accurate
(d) The expense of ...