Caltron Inc

Over the past 10 years the importance of accounting can non be all overemphasized, as weve seen our shargon of national scandals. In todays society accounting principles and standards atomic number 18 severely important in driving the shaping of financial statements. Without principles and standards, financial insurance coverage would not fairly present the financial stead of a partnership. Accounting has changed and evolved vastly over time and continues to change.Because of this I am departure to breakdown the way your financial reporting team has been recognizing tax revenue for the fourth canton of the current year and assess the implications it may have on your financial statements. I will also take you with the process of how the accounting standards be created to snap off you a better understanding of what my end is. Revenue Recognition Implications As you subsist Caltron Computers, Inc. s a publicly held company with a total market capitalisation in excess of $450 million, and you have a proposed secondary public stock religious offering coming in early February 20X2. thusly the auditors argon concerned about the furbish up of these transactions and want to bring it to your tutelage before it misrepresents the reported earnings. Caltron reported internet revenues from four transactions equal to $1,710,000 in Q4, while cash received unless totaled $495,000.The quality of earnings publicise surfaces and gives the auditors reasons to question the accounting methods and possibly their reality and ethics. The company policy for recognizing revenue is when the products are shipped, and because of this, a potential issue has surface about relating to some of the transactions. Typically revenues are earned when the earning process is complete and an turn has taken place. Once this happens the risks of ownership are transferred to the buyer, unless an arrangement for the sale states otherwise.Collectibility of the sales expense is ques tionable for three of these transactions. According to FASB, revenue generally is realized or accomplishable and earned when all of the numbering criteria are met persuasive evidence of an arrangement exists, obstetrical delivery has occurred or services have been rendered, the sellers harm to the buyer is fixed or determinable, and collectibility is somewhat assured. (FASB, 2008) Now I will follow this with a breakdown of all the