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Running head: BO BROKER COMPANY TREATMENT OF REVENUES Bo Broker Company Treatment of Revenues Kana Ng A&M CT 1 BO BROKER COMPANY TREATMENT OF...

last thing.....can you read my final product and tell me if it's acceptable? Also, I highlighted a bit in red that I'm unsure about.

Running head: BO BROKER COMPANY TREATMENT OF REVENUES 1 Bo Broker Company Treatment of Revenues Kana Ng A&M CT
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BO BROKER COMPANY TREATMENT OF REVENUES 2 Bo Broker Company Treatment of Revenues The Issue Bo Broker Company charges a fee for bringing together the Acme Construction Company and the First Bank Company. The parties agree that Bo earns her fee when Acme and First “agree” to the terms of the construction mortgage. Bo Broker Company has facilitated a transaction between the two entities for which Bo Broker Company will receive compensation with a choice of four different types of payment instrument and is seeking advice from the accountant on the treatment of those payment instruments. The payment options are as follows: 1. a non-interest bearing, unsecured “negotiable” note in payment of the fees earned, which is payable over the time period of the related construction mortgage 2. a non-negotiable note payable over the same time period 3. a commitment letter, not contingent upon the “future event” of the borrower receiving certain construction draws 4. a commitment letter, where the fees would be paid only if the borrower actually receives the draws for the construction from the lender When should revenue be recognized by the client? The Evidence FASB Statement of Financial Accounting Concepts No. 5, Recognition and Measurement in Financial Statements of Business Enterprises, explains the recognition considerations for revenues and gains. During a specified period revenues are determined to be recognizable after they have met two considerations; being earned and being realized or realizable. To be recognized as earned, the entity has to deliver the required goods, service or contracted demands. To be realized or realizable, the form of payment has to have a certain level of liquidity and value.
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