Fraud Case Case Summary: Company X is a small engineering firm that partly completed a complex device at the end of 2018. B, the head engineer knew the experimental technology failure and the Company would not be able to complete a contract of $20,000,000 next year. The company is ready to be sold in January. The controller accrued 80% of the contract revenue at December 31, 2018 on the instruction of the head engineer that the device is 80% complete at the year end. B sold the company in January 2019, but at the mid-year it was clear that Company X could not complete the project and the new owner will not be able to recover his investment. The percentage completion and amount of revenue to accrue in high-tech contracts by the companies.

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Chapter 3, Problem 3.1FC

1.

To determine

Fraud Case

Case Summary: Company X is a small engineering firm that partly completed a complex device at the end of 2018. B, the head engineer knew the experimental technology failure and the Company would not be able to complete a contract of $20,000,000 next year. The company is ready to be sold in January. The controller accrued 80% of the contract revenue at December 31, 2018 on the instruction of the head engineer that the device is 80% complete at the year end. B sold the company in January 2019, but at the mid-year it was clear that Company X could not complete the project and the new owner will not be able to recover his investment.

The percentage completion and amount of revenue to accrue in high-tech contracts by the companies.

2.

To determine

The action taken by the Company X in 2019, in regard to the revenue accrued in the previous year.

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