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Case 4-3 Family Games, Inc. (a GVV case) Family Games, Inc., is a privately owned company with annual sales from a variety of wholesome
Case 4-3 Family Games, Inc. (a GVV case) Family Games, Inc., is a privately owned company with annual sales from a variety of wholesome electronic games that are designed for use by the entire family. The company sees itself as family-oriented and with a mission to serve the public. However, during the past two years, the company reported a net loss due to cost-cutting measures that were necessary to compete with overseas manufacturers and distributors. "Yeah, I know all of the details weren't completed until January 2, 2022, but we agreed on the transaction on December 30, 2021. By my way of reasoning, it's a continuation transaction and the $12 million revenue belongs in the results for 2021. What's more, the goods were on the delivery truck on December 31, 2021, waiting to be shipped after the New Year." This comment was made by Carl Land, the CFO of Family Games, to Helen Strom, the controller of Family Games, after Strom had expressed her concern that, because the lawyers did not sign off on the transaction until January 2, 2022, because of the holiday, the revenue should not be recorded in 2021. Land felt that Strom was being hyper-techni- cal. He had seen it before from Helen and didn't like it. She needed to learn to be a team player. "Listen, Helen, this comes from the top," Land said. "The big boss said we need to have the $12 million recorded in the results for 2021" "I don't get it," Helen said to Land. "Why the pressure?" "The boss wants to increase his performance bonus by increasing earnings in 2021. Apparently, he lost some money in Vegas over the Christmas weekend and left a sizable IOU at the casino," Land responded.
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