01,6 cilitate control of produc- ince its initial public nings, and the stock E6-33. Applying Revenue Recognition Criteria Simvl Technologies, Inc., manufactures electronic equipment used to facilitate control tion processes and tracking of assets using RFID and other technologies. Since its inil offering in 1996, the company has shown consistent growth in revenue and earnings and price has reflected that impressive performance. Operating in a very competitive environment, Simpyl Technologies provides significant incentives to its sales representatives. These representatives sell the company's products direla end customers, to value-added resellers, and to distributers. Consider the four situations below. In each case, determine whether Simpyl Technologies recognize revenue at this time. Describe the reasons for your judgment. When selling directly to the end customer, Simpyl Technologies requires a sales contract with authorized signatures from the customer company. At the end of Simpyl's fiscal year sales representative A asks to book revenue from a customer. The customer's purchasing manager has confirmed the intention to complete the purchase, but the contract has only one of the two required signatures. The second person is traveling and will return to the office in a few days (but after the end of Simpyl's fiscal year). The inventory to fulfill the order is sitting in Simpyl's warehouse. Can Simpyl recognize revenue at this time? b. Sales representative B has an approved contract to deliver units that must be customized to meel the customer's specifications. Just prior to the end of the fiscal year, the uncustomized units are shipped to an intermediate staging area where they will be reconfigured to meet the customer requirements. Can Simpyl recognize revenue on the basic, uncustomized units at this time! Sales representative C has finalized an order from a value-added reseller who regularly purcha es significant volumes of Simpyl's products. The products have been delivered to the cus at the beginning of the fiscal year, and Simpyl Technologies has no further responsib the items. However, the sales representative (with the regional sales manager) is still negotiations with the value-added reseller as to the volume discounts that will be on current year. Can Simpyl recognize revenue on the items delivered to the customer Sales representative D has finalized an order from a distributor, and the items ha ered. However, an examination of the distributor's financial condition shows have the resources to pay Simpyl for the items it has purchased. It needs to se the resulting proceeds can be used to pay Simpyl. Can Simpyl recognize reve delivered to the distributor? L04 F6-34 Pom urther responsibilities for manager) is still conducting at will be offered for the the items have been deliv shows that it does not eeds to sell those items, ze revenue on the items
