sep15 - Wednesday, September 15, 2010 1. Explain why...

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1 Wednesday, September 15, 2010 1. Explain why revenue recognition is complicated for biotechnology firms like Fluidigm. Revenue recognition is complicated because of bundled products. When bundling products, it becomes difficult to tell when delivery has occurred for certain components of the bundle. It also becomes difficult to assess fair value of certain components within the bundle. 2. Why do enforcement officials (e.g., the Securities and Exchange Commission) heavily scrutinize how firms (especially young, high-tech ones) recognize revenue? Investors and analysts tend to focus on revenue and growth in revenue when evaluating a company. Therefore, managers often like to report higher revenues. If left to their discretion, some managers may have incentives to artificially boost revenues. 3. What are the four basic tests that must be met before revenue can be recognized? From SAB 104: Persuasive evidence of an arrangement exists Price is determinable or fixed Delivery has occurred or services have been rendered
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This note was uploaded on 10/12/2010 for the course ACCT 3220 at Colorado.

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sep15 - Wednesday, September 15, 2010 1. Explain why...

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