Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Revenue and Expense Recognition at NetSuite, Inc. Teaching Note Suggested Case Questions 1. What services does NetSuite provide to its customers? What is the companys

Revenue and Expense Recognition at NetSuite, Inc. Teaching Note Suggested Case Questions

1. What services does NetSuite provide to its customers? What is the companys business model? How does the company generate revenue streams? What are the key success factors in the companys business? Will these be observable from the companys financial performance?

2. How successful has NetSuite been recently? What is your assessment of the companys financial performance? Its cash flow performance?

3. What is your assessment of the companys revenue recognition policy with respect to its subscription fees? Are these accounting methods in accordance with GAAP

4. Evaluate the impact on the companys financial statements in 2013 if the company had always expensed commission costs immediately, instead of capitalizing and amortizing them over time. [Hint: Using financial statement information, reconstruct the transactions made in 2013 by NetSuite with respect to commission costs.] What is your assessment of the companys policy of capitalizing and amortizing commission costs? Are these accounting methods in accordance with GAAP?

5. How should NetSuites management respond, if at all, to the criticism that its policy of capitalizing and amortizing sales commissions distorts the companys financial performance?

6. Is NetSuite worth the target price of $125 per share established by Credit Suisse? Why or why not?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Comparative International Accounting

Authors: Christopher Nobes, R. H. Parker

6th Edition

0273646028, 978-0273646020

More Books

Students also viewed these Accounting questions

Question

What are the characteristics of managers adept at working abroad?

Answered: 1 week ago

Question

Describe a typical technical skills training program

Answered: 1 week ago