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Essay / Research Paper Abstract
This 3 page paper discusses Corinthian Collages Inc. and their decision to change the way they accounted for some revenue items as a result of SAB 104. The paper looks at what the change was, why it was made and the relevant standards and where the changes can be seen in the annual accunts. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEsab104.rtf
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Unformatted sample text from the term paper:
in the way that internships are being treated; these are now seen as classes and the revenue is recognised when the students are doing the internship and not, as was
previously the case, when they were in the classroom. The core of this issue is the recognition of revenue, and when it should be recognised. This is an issue
that has been difficult for many organizations for a number of years. For a long time there had been little guidance other than in the Financial Accounting Standards Boards core
concepts. The FASBs core concept statement says "in recognizing revenue and gains the two conditions (being realized... and being earned) are usually met by the time product...is delivered or
services are rendered to customers..." (Cheney, 2006). Where there are good being sold this is easier to determine, and general contract law
and accounting cases appear to indicate that the terms are satisfied when title passes (Cheney, 2006). However, for the case of classes and tuition the position is less clear,
this is a service that is ongoing, there is an agreement at the beginning for the level of the service and how it will be delivered, and theoretically the revenue
could be realised either on an ongoing basis where the fees for the service are earned; such as the attendance of the classes, but there is also an argument that
this is superficial to the contact and service, and that it has been agreed with fees due even where there is an absence from a class. Concept 5 of
the FASB is also backed up by concept 6, which gives criteria for when income is realized and the completion of the process, but this is of little use in
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