Essay --

at a lower place U.S. GAAP, entities can generally recognize revenue enhancement when it is realized or doable and reached. 1.Revenue can be recognized when it is realized or realizable. For revenue to be realized, a company must receive cash or claims to cash in exchange of goods, services, or other assets. Similarly, for revenue to be realizable, the firms goods, services, or other assets must be change for other assets that are readily convertible to known amounts of cash or claims to cash (605-10-25-1). This means that the entitys assets were non exchanged for cash or claims to cash, but instead, for another companys assets, such as short investments and government securities.2.Revenue can be recognized when earned. Entities can earn revenue if the firm has substantially accomplished what it must do to be entitled to the benefits represented by the revenues (605-10-25-1). For example, when companies substantially completed (a) provision of nonrecreational services, ( b) delivery or production of goods, or (c) other activities that constitute its on-going major or central operations, revenues is earned. Issue 2 (Bill and dominate)Question One of the issues faced by TerraSure relates to revenue recognition of sinless goods that have not yet been delivered to customers due to inadequate storage billet in customers warehouses. TerraSure has engaged in two unlike methods to deal with this situation. With the first method, TerraSure segregates the inventory within its own finished goods warehouse. In the second method, TerraSure ships customers inventory to a third party warehouse, where customers directly pick up their inventory. Background Regarding bill and hold inventory, the unsweet Staff Guidance states that these ... ...ordance with the terms of the arrangement, has been delivered or is available for immediate and insipid delivery.3.The license period of the arrangement has begun and the customer can fetch its exploitation, exhibit ion, or trade.4.The arrangement tip is fixed or determinable.5.Collection of the arrangement fee is reasonably assured (926-602-25-1)Responses Since TerraSure does not allow its customers to show the films until after its promotional activities begin, it cannot recognize revenue at the point of sale. To correctly recognize revenue for the film licensing contracts, customer must have all rights to exploit, exhibit, or sale (926-602-25-10). Even though the film is delivered to the customer, TerraSure must recognize revenue from licensing agreements not at the point of sale, but after the marketing department begin its promotional activities.