Caltron Inc

Over the past decennium years the importance of news report cannot be overemphasized, as weve seen our sh be of national scandals. In todays society news report principles and standards are severely important in movement the formation of financial statements. Without principles and standards, financial reporting would not fairly 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 receipts for the fourth canton of the current year and assess the implications it may keep up on your financial statements. I will in any case take you through the process of how the accounting standards are created to give you a better understanding of what my terminal is. Revenue Recognition Implications As you know Caltron Computers, Inc. s a publicly held company with a wide market capitalization in excess of $450 million, and you energize a proposed secondary public stock crack coming in early February 20X2. Therefore the auditors are concerned about the impact of these transactions and fatality to bring it to your attention before it misrepresents the account earnings. Caltron reported net tax revenues from four transactions equal to $1,710,000 in Q4, while cash received only meet sex $495,000.The quality of earnings issue surfaces and gives the auditors reasons to question the accounting methods and possibly their honesty 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 bring in 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 arrangement for the sale states otherwise.Collectibility of the sales price is questionable for three of these tra nsactions. According to FASB, revenue generally is realized or realizable and take in when all of the following criteria are met persuasive order of an arrangement exists, delivery has occurred or services have been rendered, the sellers price to the buyer is fixed or determinable, and collectibility is reasonably assured. (FASB, 2008) Now I will follow this with a breakdown of all the