Shamma Al Rathy - Essay Example

ill be charged for the architects' services instead of at cost, significantly increase the company's assets and, correspondingly, the shareholders equity;Such "unbilled" receivables may mislead if they include also uncompleted stages of the projects.It would be recommended to reflect the projects at cost. At the end of reporting period ongoing projects should be evaluated, percentage of their completion estimated, and corresponding revenue recognized.6. Premium Coupons:From consumers' point of view these coupons add value and promote purchase of coffee, so cost of redeemed coupons should apply to the sales revenue of coffee;Given that the company can reasonably estimate from previous experience percentage of the coupons that will be redeemed in the future and that the sale of promotion coffee has already been maid, allowance for the 10% of outstanding coupons should be applied to the 2004 sales revenues for coffee.7. Travelers Checks:Bank records 1.

5% fee as its revenue;American Express records increase in the checks outstanding and unearned revenue.8. Product Repurchase Agreement:Neither of the manufacturers has revenue in 2004:Manufacturer A should not recognize AED 600,000 as revenue because of possible repurchase of the product in the future,Wholesaler B does not have revenue because compensation for its services will be paid only in July of the following year.9. Franchises:The initial services (training, introduction to the referral system, and marketing aids) are provided during the year when the agreement is signed.

75% of the receipts come from the annual fees.The company should recognize the initial franchise fee as revenue in the same year the agreement is signed, or allocate it between two or three first years. If the market becomes saturated,. Trees left to grow for one more year are equivalent to work-in-process inventory for manufacturing companies. On-going projects reflected at the rates at which the customers will be charged for the architects' services instead of at cost, significantly increase the company's assets and, correspondingly, the shareholders equity; It would be recommended to reflect the projects at cost.

At the end of reporting period ongoing projects should be evaluated, percentage of their completion estimated, and corresponding revenue recognized. Given that the company can reasonably estimate from previous experience percentage of the coupons that will be redeemed in the future and that the sale of promotion coffee has already been maid, allowance for the 10% of outstanding coupons should be applied to the 2004 sales revenues for coffee. The company should recognize the initial franchise fee as revenue in the same year the agreement is signed, or allocate it between two or three first years.

If the market becomes saturated, the company's profits are likely to drop 25% in comparison with the previous year and then be kept at the same level.