As part of an audit team of Alpha Inc., a U.S. listed company, that is the parent of Stella Co., its 100%-owned Chinese subsidiary, you have been assigned to analyze the following information about sales transactions of Stella Co., and to answer these questions.

1) Apply the currently effective U.S. GAAP revenue recognition criteria (i.e., the four SEC criteria in ASC 605-10-S99) to Stellas sales transactions to determine when revenue can be recognized. Provide explanation/justification for how you apply each U.S. GAAP criterion to Stellas sales transactions.

2) Discuss transition methods of this new revenue standard, i.e., how an entity should apply this new standard for the first time. Which transition method do users/investors of financial statements likely prefer? Why?