problem 89
Accounting Decisions and Judgments A Transition Resource Group for Revenue Recognition (TRG) was established by the FAS comment on questions from companies transitionin g to ASC 606. The topic of TRG Memo No. 59 is the account nalying the B to AD&J for payment to customers in the revenue recognition process. The follo 7-89 presented by the TRG wing is a summary of an example Accounting Treatment Service Provider makes a $1 million payment to a customer as part of the negotiations in a contract to provide IT outsourcing services. The payment to the customer was negotiated because the customer will incur costs to terminate employees and dispose of equipment that is currently utilized in the operations to be outsourced The entity estimates that the customer ill pay a fee of $6 million for five years of services. The contract is cellable at the end of any month for no penalty, although Service Provider expects the customer to continue Payments LO4 purchase services for five years because the customer has limited ability to perform the services intenally given the customer terminated employees and disposed of equipment. Additionally, the customer has incurred Service Provider significant setup costs and will incur the significant setup costs to change vendors. knows from past experience with entering into similar contracts with other customers that most customers do er has no previous revenue from contracts with this customer Required Locate TRG Memo No. 59 from the FASB website (fasb.org) and indicate (1) the date of the memo, (2) the main question addressed by the TRG, and (3) the Codification standard that is referenced for the question. The TRG Memo No. 59 references ASC 606-10-32-27 in the discussion regarding the timing of recogni of consideration payable as a reduction of revenue when consideration payable was accounted for as a reduction of a transaction price. Why is this Codification reference relevant? Briefty summarize how two different views evolved from this particular Codification reference. In the example provided above, how would the consideration payable be recognized under the two different views described in part b? What view do you support in reference to this example? Explain. d. AD&J 7-90 zing P For ads placed on Google Network Members' properties, we evaluate whether we are the principal (.e, reportand revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, we report advertising Arrangements Lo6 Alphabet Inc. (Google) reported the following disclosure in a recent Form 10-Q revenues for ads placed on Google Network Members' properties on a gross basis, that is, the amounts billed our customers are recorded as revenues, and amounts paid to publishers are recorded as cost of revenues control the advertising inventory before it is transferred to our customers. Our tont heinn primarily responsible to our Accounting Decisions and Judgments A Transition Resource Group for Revenue Recognition (TRG) was established by the FAS comment on questions from companies transitionin g to ASC 606. The topic of TRG Memo No. 59 is the account nalying the B to AD&J for payment to customers in the revenue recognition process. The follo 7-89 presented by the TRG wing is a summary of an example Accounting Treatment Service Provider makes a $1 million payment to a customer as part of the negotiations in a contract to provide IT outsourcing services. The payment to the customer was negotiated because the customer will incur costs to terminate employees and dispose of equipment that is currently utilized in the operations to be outsourced The entity estimates that the customer ill pay a fee of $6 million for five years of services. The contract is cellable at the end of any month for no penalty, although Service Provider expects the customer to continue Payments LO4 purchase services for five years because the customer has limited ability to perform the services intenally given the customer terminated employees and disposed of equipment. Additionally, the customer has incurred Service Provider significant setup costs and will incur the significant setup costs to change vendors. knows from past experience with entering into similar contracts with other customers that most customers do er has no previous revenue from contracts with this customer Required Locate TRG Memo No. 59 from the FASB website (fasb.org) and indicate (1) the date of the memo, (2) the main question addressed by the TRG, and (3) the Codification standard that is referenced for the question. The TRG Memo No. 59 references ASC 606-10-32-27 in the discussion regarding the timing of recogni of consideration payable as a reduction of revenue when consideration payable was accounted for as a reduction of a transaction price. Why is this Codification reference relevant? Briefty summarize how two different views evolved from this particular Codification reference. In the example provided above, how would the consideration payable be recognized under the two different views described in part b? What view do you support in reference to this example? Explain. d. AD&J 7-90 zing P For ads placed on Google Network Members' properties, we evaluate whether we are the principal (.e, reportand revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, we report advertising Arrangements Lo6 Alphabet Inc. (Google) reported the following disclosure in a recent Form 10-Q revenues for ads placed on Google Network Members' properties on a gross basis, that is, the amounts billed our customers are recorded as revenues, and amounts paid to publishers are recorded as cost of revenues control the advertising inventory before it is transferred to our customers. Our tont heinn primarily responsible to our
