Caltron Inc

Over the past ecstasy courses the importance of accounting cannot be all overemphasized, as weve seen our share of case scandals. In todays society accounting principles and standards are severely important in driving the formation of financial statements. Without principles and standards, financial reporting would not more or less present the financial position of a company. Accounting has changed and evolved vastly over time and continues to change.Because of this I am going to breakdown the way your financial reporting team has been recognizing gross for the fourth quarter of the current year and assess the implications it may have on your financial statements. I indue also take you through the bidding of how the accounting standards are created to give you a better understanding of what my conclusion is. Revenue Recognition Implications As you know Caltron Computers, Inc. s a publicly held company with a descend market capitalization in excess of $450 million, and you h ave a proposed substitute public stock offering coming in early February 20X2. therefrom the auditors are concerned about the impact of these legal proceeding and want to father it to your attention before it misrepresents the reported earnings. Caltron reported net revenues from four transactions equal to $1,710,000 in Q4, while cash received only add up $495,000.The quality of earnings neck 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 come about relating to some of the transactions. Typically revenues are earned when the earning process is complete and an exchange has taken place. Once this happens the risks of ownership are transferred to the buyer, unless an order of battle for the sale states otherwise.Collectibility of the sales price is questionable for three of these transactions. According to FASB, revenue generally is realized or realizable and earned when all of the following criteria are met persuasive evidence of an arrangement exists, delivery has occurred or function have been rendered, the sellers price to the buyer is fixed or determinable, and collectibility is reasonably assured. (FASB, 2008) presently I will follow this with a breakdown of all the