memo#1 - MEMO To: Assembly Lines Incorporated Accounting...

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MEMO To: Assembly Lines Incorporated Accounting Department From: Allie Morgans, External Audit Re: Revenue Recognition Issue with Candy Maker International Date: October 20, 2011 Assembly Lines Incorporated Accountant, I was informed with your concerns about the revenue recognition issues related to the sales agreement with Candy Maker International. I will explain the different components in the major accounting issue of revenue recognition, and how to approach the separate units of accounting when understanding the different delivery segments and installation. The sales agreement between Assembly Lines Incorporated and Candy Maker International produces a revenue recognition problem that comes from attempting to determine a standalone value of the three segments and whether to recognize the revenue fully upon installation or to separate the value into two separate units of accounting, with one unit of final delivery of the three segments and a separate unit of installation. Codification (605-25-55-13 through 55-18 & 605-25-25-5) provides guidance with revenue recognition in multiple-element arrangements on how to handle the separate units of accounting with manufacturing equipment. The three segments need to be one separate unit of
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memo#1 - MEMO To: Assembly Lines Incorporated Accounting...

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