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2: According to the Wall Street Journal (August 16, 2016) news report, Hain Celestial Group announced it would delay its forthcoming earnings announcement due a
2: According to the Wall Street Journal (August 16, 2016) news report, Hain Celestial Group announced it would delay its forthcoming earnings announcement due a potential problem with its revenue recognition policy. Hain historically recognized revenues when products were shipped to its distributors, but was considering a policy where revenue would be recognized when products were sold by distributors to stores. Required: a. Is recognizing revenue when products are shipped to distributors appropriate? b. How could the policy of recognizing revenue when products are shipped to distributors be misused to "manage" earnings? c. Is recognizing revenue when products are shipped necessarily a violation of GAAP? Explain
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