Question
1.POR Corporation is an automobile manufacturer. POR has an unused piece of manufacturing equipment in one of its factories (i.e., a capital asset). POR has
1.POR Corporation is an automobile manufacturer. POR has an unused piece of manufacturing equipment in one of its factories (i.e., a capital asset). POR has been approached by CIV Ltd., who would like to purchase the equipment. No contract has been signed, no money has been received from CIV, and the equipment is still located in POR's factory. Since this is a sale of a plant asset, not of inventory, the plant's General Manager feels that the revenue recognition principle doesn't apply, and that the sale of the asset can be recorded.
What is your response to the General Manager's request?
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