Acctg 642: Case 10-1, Solvgen Inc.

The three main types of payment arrangements with providers are: capitation, discounted fees, and salaries. The three methods allow risk sharing in

Consider journal entry that recognized $35 million of revenue in 2001 from the EDS contract based on WorlCom’s expectation that the five-year required cumulative minimum payment would not be met. Based on your own analysis of GAAP, explain the propriety to impropriety of this journal entry.

20) With regard to consideration in a sales contract, the UCC differs from the common law in that

University of Phoenix Material: Elements of a Contract Scenario Read the Elements of a Contract Scenario.

2. Due to the circumstances of the contract (that it be for sale of land) specific performance will be awarded.

ii) When dealing with customers, Eden Sounds prefer to use a “Standard form contract”. Explain what a ‘standard form contract’ is, and list the advantages to both parties in using them.

3.) . Should the February 1, 2012, agreement and the May 1, 2012, agreement be accounted for separately or as a single arrangement?

b. Continuing employment. The terms of continuing employment by the selling shareholders who become key employees may be an indicator of the substance of a contingent consideration arrangement. The relevant terms of continuing employment may be included in an employment agreement, acquisition agreement, or some other document. A contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is compensation for postcombination services. Arrangements in which the contingent payments are not affected by employment termination may indicate that the contingent payments are additional consideration rather than compensation.

The offeree considered that the contractor should pay the penalty as it was a common practice and the principles should apply even with the existence of the provision binding the offeror to keep the offer open for acceptance for a given period.

To determine these agreements should be accounted for separately or as a single arrangement, we would consider in ASC 605-25 Revenue Recognition to Multiple-elements agreements

For each of the specific contracts described in the case, please describe the best revenue recognition policy considering the criteria in SAB 101. (Onsetcom, Cataumet, Sandham, XLSemi, Technical Devices and Ashaban)

4. Name two types of negotiated contracts and describe the method of payment and incentive concept.

II) The delivery method in the contract is not specific and may cause confusion. To improve this contract, it needs to include detailed method of delivery.

Amgen Inc. is a biotech company. The responsibilities of the Product Development Teams (PDT’s) can be described as “discretionary cost centres”. The output of a PDT is therefore difficult to relate to its

In section 5, the author hypothesizes that the accounts receivable accruals map into the cash flow realizations to a lesser extent than those under SOP 91-1. The author points out that the earlier the recognition, the more likely the customer is to not pay. Circumstances such as acceptance, commitment to pay and/or needs for customization may change prior to or upon delivery of the software or rendering of the service that may not be foreseen at the time of contract signing or earlier than as specified in SOP 91-1.