TABLE 1: EXAMPLES OF INDUSTRY-RELATED ISSUES The impact of the new standard will be greater in industries due to the timing of their services or the nature of their products. Here are some industry-specific issues related to the new standard Defense and aerospace equipment General Dynamics disclosed that it now recognizes revenue for the manufacture ofbusiness jet aircraftata single point in reporting entities use percentage of completion accounting. The new standard replaces all existing guidelines and may significantly impact the acceleration of reported revenues. customer-as opposed to waiting for thee Cash incentives can be separate performance obligations vs. marketing incentives. Promises to provide goods Ford Motor Company disclosed that it now reports revenue sooner for vehicles subject to a guaranteed resale value. The revenue is now recognized omo separate performance obligations. Tesla reported that cars leased generally accounted for as sales revenue rather than operating leases Media and entertainment The up-front or installation setup fee can now be capitalized and deferred. WarnerMedia expects to see deferrals content (primarily its HBO segment) Currently this revenue is recognized when acoess to the library is granted evenue intellectual property such as brands, trade primarily for the Wamer Brothers segment. Microsoft disclosed the impact of the standard on sales of Windows 10 icensing and multiple-year subscriptions. The company is now recognizing revenue at the time of the contract rather than overthe evaluated to determine if there are multiple performance obligations. The outcome is dependent on customization Revenue for certain time-based fic outside evidence) that were previouslyDue to the complexity of the new recognized over time may now be recognized at a point in time. standard, Apple is waiting until fiscal 2019 to adopt the new standard since The activities of the licensee of software may impact the timing of
TABLE 1: EXAMPLES OF INDUSTRY-RELATED ISSUES The impact of the new standard will be greater in industries due to the timing of their services or the nature of their products. Here are some industry-specific issues related to the new standard Defense and aerospace equipment General Dynamics disclosed that it now recognizes revenue for the manufacture ofbusiness jet aircraftata single point in reporting entities use percentage of completion accounting. The new standard replaces all existing guidelines and may significantly impact the acceleration of reported revenues. customer-as opposed to waiting for thee Cash incentives can be separate performance obligations vs. marketing incentives. Promises to provide goods Ford Motor Company disclosed that it now reports revenue sooner for vehicles subject to a guaranteed resale value. The revenue is now recognized omo separate performance obligations. Tesla reported that cars leased generally accounted for as sales revenue rather than operating leases Media and entertainment The up-front or installation setup fee can now be capitalized and deferred. WarnerMedia expects to see deferrals content (primarily its HBO segment) Currently this revenue is recognized when acoess to the library is granted evenue intellectual property such as brands, trade primarily for the Wamer Brothers segment. Microsoft disclosed the impact of the standard on sales of Windows 10 icensing and multiple-year subscriptions. The company is now recognizing revenue at the time of the contract rather than overthe evaluated to determine if there are multiple performance obligations. The outcome is dependent on customization Revenue for certain time-based fic outside evidence) that were previouslyDue to the complexity of the new recognized over time may now be recognized at a point in time. standard, Apple is waiting until fiscal 2019 to adopt the new standard since The activities of the licensee of software may impact the timing of
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Pick one company example in TABLE 1 and provide a conjecture about why the company recognizes revenue in that manner per ASC 606.?
Transcribed Image Text:TABLE 1: EXAMPLES OF INDUSTRY-RELATED ISSUES
The impact of the new standard will be greater in industries due to the timing of their services or the nature of their products.
Here are some industry-specific issues related to the new standard
Defense and aerospace equipment
General Dynamics disclosed that it now
recognizes revenue for the manufacture
ofbusiness jet aircraftata single point in
reporting entities use percentage of
completion accounting. The new
standard replaces all existing guidelines
and may significantly impact the
acceleration of reported revenues.
customer-as opposed to waiting for thee
Cash incentives can be separate
performance obligations vs. marketing
incentives. Promises to provide goods
Ford Motor Company disclosed that it
now reports revenue sooner for
vehicles subject to a guaranteed resale
value. The revenue is now recognized
omo
separate performance obligations.
Tesla reported that cars leased
generally accounted for as sales
revenue rather than operating leases
Media and entertainment
The up-front or installation setup fee
can now be capitalized and deferred.
WarnerMedia expects to see deferrals
content (primarily its HBO segment)
Currently this revenue is recognized
when acoess to the library is granted
evenue
intellectual property such as brands, trade
primarily for the Wamer Brothers segment.
Microsoft disclosed the impact of the
standard on sales of Windows 10
icensing and multiple-year
subscriptions. The company is now
recognizing revenue at the time of the
contract rather than overthe
evaluated to determine if there are
multiple performance obligations. The
outcome is dependent on customization
Revenue for certain time-based
fic
outside evidence) that were previouslyDue to the complexity of the new
recognized over time may now be
recognized at a point in time.
standard, Apple is waiting until fiscal
2019 to adopt the new standard since
The activities of the licensee of
software may impact the timing of
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