Vendor-specific Objective Evidence

Hemo-Tech Case Presentation Outline * 1 Myles institution Facts * 1 Issues Multiple Element Arrangement * How should revenue be allocated to for each one deliverable? * What sales expenditure should be allocated to each deliverable? * How argon deliverables defined? * 25-4 A vendor shall evaluate all deliverables in an correspondence to determine whether they represent dissever units of accounting. That evaluation shall be performed at the blood line of the arrangement and as each pointedness in the arrangement is delivered. * 25-5 In an arrangement with multiple deliverables, the delivered item or items shall be considered a signalize unit of accounting if both of the following criteria are met * a. The delivered item or items have value to the customer on a standalone basis. The item or items have value on a standalone basis if they are exchange separately by any vendor or the customer could sell the delivered item(s) on a standalone basis. In the context of a customers ability to resell the delivered item(s), this criterion does not require the existence of an observable market for the deliverable(s). b. Subparagraph superseded by Accounting Standards Update No. 2009-13 * c. If the arrangement includes a general advanced of return relative to the delivered item, delivery or performance of the undelivered item or items is considered probable and substantially in the control of the vendor * 25-6 A delivered item or items that do not qualify as a separate unit of accounting within the arrangement shall be combined with the otherwise applicable undelivered item(s) within the arrangement.The allocation of arrangement consideration and the recognition of revenue then shall be determined for those combined deliverables as a adept unit of accounting. * * warranty, update machines * 2 Sandra Alternatives * Companys sell price to a different customer * A different companys exchange price of the same product * Selling price of a similar products profi t margin, applied to the total cost of product * Proportional based on costs * 3 4 Troy Jessie Literature Multiple-Deliverable Revenue Arrangements ASC 605-25 * Vendor-specific objective take the stand ASC 605-25-30-6A * 30-6A Vendor-specific objective endorse of selling price is limited to either of the following * a. The price supercharged for a deliverable when it is sold separately ( annually, supplies-$3,000 per box, monitor and test-$600,000 annually) * b. For a deliverable not yet being sold separately, the price established by management having the relevant authority (it must be probable that the price, at one time established, will not change before the separate introduction of the deliverable into the marketplace). Third-party evidence ASC 605-25-30-6B * Third-party evidence of selling price is the price of the vendors or any competitors largely interchangeable products or services in standalone sales to similarly situated customers. * screen and report services-$730,0 00 median price * Estimated selling price ASC 605-25-30-6C * The vendors best estimate of selling price shall be consistent with the objective of determine vendor-specific objective evidence of selling price for the deliverable that is, the price at which the vendor would do if the deliverable were sold by the vendor regularly on a standalone basis.The vendor shall consider market conditions as well as entity-specific factors when estimating the selling price. * equipment * 5 6 Kelly Crystal Recommendations * IFRS IAS 18? Type Revenue credit Subject Accounting for multiple-element revenue transactions under U. S. GAAP (specifically identifying deliverables and determining selling price) and exploring the sources of IFRS guidance for such transactions