The Revenue Recognition Policies between Zynga and Glu Companies - Essay Example

The policies concerning the platform on which the games should be published also differ. Glu’s games are made available on all smartphones while the Zynga games are available on iOS and Androids. In making income the two companies differ. Glu generates its income from the sales of the games to individuals who download from digital storefronts like Google Play Store. On the other hand, Zynga does not generate income from the sale of the game, but they provide the games for free.

Glue also provides or creates games using third-party licenses like Robocop while Zynga creates games using their license only. Glu is concerned more with partnerships to make sales and the creation of games. Zynga does not work with partners in bringing up new games. Zynga has expanded his market due to investment in the brand, people, and infrastructure but Glue tries to use third parties and partnerships in production. The similarity between the two companies is that they provide games to mobile users regardless of location (Form 10-K, 2014).

Question Two In the 2013 Form 10-K, Zynga include the SEC’s comments which are related to revenue recognition in their 2014 Form 10-K. those comments included areas covering the effectiveness of procedure and control limitation, changes in financial reporting over the internal control, and management reporting. The management of the company is given the mandate of maintaining and establishing effective internal control on issues of financial reporting as elaborated in the Exchange Act, Rule 13a-15(f).

In the 2013 Form 10-K, as reviewed by the company’s audit committee, the financial reporting was effectively controlled internally. The company did not have changes based on internal control over financial reporting as noted in the evaluation by management concerning Rules 15d-15(d) or 13a-15(d). Finally, the management noted that in designing the disclosure procedures and controls all controls made by the company can only assure of achieving or fulfilling the control objectives (Form 10-K, 2014).

Question Three The two companies have effective control over the revenues. They evaluate and control their revenues concerning Rule 15d-15(d) or 13a-15(d) of the Exchange Act. The evaluation and control done by the two companies concerning the EA rules enable them to operate properly since they are governed by the Exchange AC. This further protects the companies from undergoing loss due to the depreciation of currencies since they operate worldwide. The only risk the companies can face is a management failure.

They have entrusted the management in carrying out control and evaluation of the operations. The managers can fail to compile an appropriate report as a result of negligence or corruption (Form 10-K, 2014).