Velocity

Lightho wasting disease Case
In the lighthouse case, there are devil issues identified. Can the arrangement be considered as a dual deliverable? & How many units of history? (Given we have two-fold deliverable)
When analyzing the arrangement with its customers, it is certain that the contracts for delivery and installation of the hardware winding meets all criteria for revenue recognition set for in the (SAB none 104).
There are two alternatives in the Lighthouse case.
* Identifying the whirl and service, as a single unit of accounting and recognizing some(prenominal) as the service is provided. According to (EITF 00-21), three criteria need to be met in order for a sixfold deliverable to be considered a separate unit of accounting. The first criteria being individually deliverable need to have standalone value to the customer. But because the gizmo does non meet the first criteria as having standalone value to its customers; the cheat should be combined with the service pick outd oer the expect life of the contract.

* Second alternative pull up stakes be to recognize the devices and services separately. According to FASB 605-10-25-1(a) states that revenue and gains generally are non recognized until being recognize and earned.



Accordingly, if collection of the sale determine is not reasonably assured, the installment method of recognizing revenue is not acceptable. Revenue recognition for the devices does not depend on the use of the service. Revenue already realized from the sale of device leave behind be recognized at the time the transaction is consummate because it is realized and earned.
It is clear that the Lighthouse arrangement is a multiple deliverable and cannot be considered a separate unit of accounting because each deliverable doesnt have a stand-alone value to its customers. After analyzing the Lighthouse case, the first alternative will be the preferred solution to the case. Revenue already realized from sale of device will be recognized over the sum measure of the life of...If you want to get a full essay, order it on our website: Orderessay



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