Accounting -THEORY2 – Writing Assignment – Revenue Recognition

| January 31, 2017

Question
THEORY2 – Writing Assignment – Revenue Recognition

TeccoInc is a firm that manufactures multiplayer gaming systems allowing players to compete with each other over the Internet. Tecco is getting ready to launch its new system, the Max-Box. The firm believes this product will be quite successful. Shelly Gordon, the President of Tecco Gaming, located at 4000 Teco Avenue, Miami FL 33121 is your client. You are a newly hired staff member of FIU, Inc., an accounting firm located at 123 Main Road, Miami, FL 33121. Because Shelly is unfamiliar with the revenue recognition principle and proper accounting treatment regarding revenue recognition according to US GAAP she has hired FIU, Inc. to explain the accounting treatments specified by US GAAP.

Your firm has delegated to you the task of determining the treatment of revenue recognition, and has asked that you prepare a four (4) page typed memo including a works cited page (the 4th page of your memo should be designated as the works cited page; use MLA Format for your works cited page) to the client explaining

1 The standards that govern US GAAP treatment of revenue recognition.

2 The core revenue recognition principle and how to apply the principle.

3 The concept of performance obligation and how to determine whether to recognize revenue at a single point in time or over a period of time.

4 How to recognize revenue for contracts that contain multiple performance obligations(See information below regarding a transaction that particularly concerns the President of Tecco).

5 The required financial statement note disclosures regarding revenue recognition.

In addition, you are toformulate a question to ask the client that would help you determine the different types of customer-related contract transaction(s) it is involved in, and include that in the conclusion of your memo.

Information regarding one of Tecco’s transactions that particularly concerns Shelly regarding revenue recognition is as follows:

• The Max-Box includes the physical Max-Box unit as well as a one-year subscription to the multiuser Sys-Net platform of Internet based applications and games.

• Tecco sells individual Max-Box units for $375.

• Tecco sells individual one-year subscriptions to the Sys-Net platform for $125.

• As a package deal, Tecco sells the Max-Box System (unit plus subscription) for $450.

• On January 1, 2015, Tecco delivered 1,000 Max-Box Systems to Comp USA at a price of $450 per system. Tecco received $450,000 from Comp USA on January 30, 2015.

This memo is expected to be professional and informative. Remember the purpose of the memo and the audience that it is addressing when you write it.

Follow the proper format for a memo, as presented in May & May, Effective Writing: A Handbook for Accountants. 10thed. I will allow sub-headings in your memo.

Helpful Hint: I suggest you start by reading pages 230-240, in the Updated Chapter 5, 8th Edition pdf file posted on blackboard before reading FASB Accounting Standards Update (ASU) No. 2014-09 pdf file posted on blackboard. Reading the updated Chapter 5 material may help you better understand the information you are to address in your memo and what to look for, to ensure you are citing the correct sections when researching FASB ASU No. 2014-09.

Remember to include headings, a proper introduction that previews your headings, and a conclusion. When citing sources within your memo and preparing a works cited page, please follow the formats illustrated in the May & May text on pages 162-164. Please be sure to prepare your memo according to the proper format for a memo, as presented in May & May, Effective Writing: A Handbook for Accountants. You may include tables and / or vertical enumerated points to illustrate the information you are providing to your client.

NOTE: This is an individual exercise. You may not collaborate with anyone on this assignment! If your memo is substantially similar (e.g., very similar wording and phrasing) to a memo submitted by another student, I will consider the similarity as evidence that you collaborated with that individual. In that case, both you and the other student will receive zero (0) points on this assignment.

IMPORTANT WARNING: If your writing assignment score includes 3 or more of the student learning outcomes in the Developing category, most likely you will fail this assignment.

Research Hints

Effective July 1, 2009, the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) is the official guidance regarding GAAP. You can locate the Codification at.org/ascLogin.cfm”>http://aaahq.org/ascLogin.cfm

Note: You will be required to enter the following User Name and password to gain access to the Codification.

User Name: AAA51093

Password: ZVb3K9U

There is a tutorial on the FASB Codification webpage for those who want further details on navigating the website.

Note: You are to use the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) as one of your main source(s) for this writing assignment. Failure to use the FASB ASC will result in you not being awarded full points on your writing assignment, which may result in your failing the assignment. See FASB ASC Citing Hints on the next page.

FASB ASC Citing Hints

The FASB ASC system is broken down as follows:

Topic XXX

Subtopic XX

Section XX

Paragraph XX

So if you were to reference 410-20-25-5, Asset Retirement and Environmental Obligations, you are telling the reader that you located your information in the FASB ASC under:

Topic 410

Subtopic 20

Section 25

Paragraph 5

The following example is acceptable when citing the FASB ASC in my class.

The initial recording of an asset retirement obligation (ARO) requires the capitalization of asset retirement costs, by increasing the book value of the related asset by the same amount of the ARO liability recorded (FASB ASC 410-20-25-5).

When preparing your Works Cited page, the following is acceptable for my class when referencing the FASB ASC.

Example:

Financial Accounting Standards Board (FASB),XXXX.Accounting Standards Codification™.

Stamford, Conn.: FASB.

Note: TheXXXX above represents the Year you consulted/accessed the FASB Accounting Standards Codification (ASC). On your memo since you are consulting the FASB ASC in2015 your reference on your Works Cited page would be as follows:

Financial Accounting Standards Board (FASB), 2015.Accounting Standards Codification™.

Stamford, Conn.: FASB.

Word version of the writing assignment listed above:.fau.edu/bbcswebdav/pid-2205285-dt-content-rid-20661155_1/xid-20661155_1″>Writing Assignment – Revenue Recognition.doc

Get a 30 % discount on an order above $ 50
Use the following coupon code:
COCONUT
Order your essay today and save 30% with the discount code: COCONUTOrder Now
Positive SSL