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Essay / Research Paper Abstract
This 8-page paper focuses on various forms of revenue recognition for Caltron Computers. Bibliography lists 3 sources.
Page Count:
8 pages (~225 words per page)
File: D0_MTcalaccou.rtf
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Unformatted sample text from the term paper:
total market capitalization in excess of $450 million. The companys claim to fame is the manufacture of minicomputer systems that offer the power of a mainframe at far less cost.
The minicomputers rely on Unix systems and operate through multiple Intel Pentium chips. Memo To the Caltron Board:
Some issues have occurred recently in respect to Caltron Computers methods of revenue recognition. This came to light when the following transactions took place, and I
would like to take the opportunity to address these concerns. This memo should also provide clarity to Caltrons auditors, Pearle, Gower & Quill, when it comes to reporting these transactions.
The auditors have raised concerns that Caltrons methods of revenue recognition will have an impact on both earnings and the companys second stock offering.
Overall, Caltron generally recognizes revenue when minicomputers are shipped. During the fourth quarter of 20X1, Caltron recognized revenue from the four following transactions. Elegant Housing Inc.
In this transaction, accountants recognized $400,000 of revenue for two systems shipped to Elegant Housing, Inc. on a trial basis for six
months. Elegant paid Caltron $20,000 at the time of shipment, which took place November 15, 20X1. This "down payment" will be applied to the purchase price if Elegant decides to
accept the systems. That payment will also be forfeited, should Elegant decide to return the systems. Preliminary reports from Elegant are that they are quite satisfied with the systems. Alation
Electronics This second transaction is a bill-and-hold arrangement for $250,000 of revenue on a system not shipped as of December 31, 20X1.
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