Accounting Revenue Recognition Research Paper Example | Topics and Well Written Essays - 500 words

Accounting Revenue Recognition - Research Paper vitrineSolvGen Inc has agreed to three separate deliverables a) The commercial launch of the first promoter system Version 1- Delivered March 31 b) The commercial launch of an improved instrument system Version 2- Pending development c) The commercial launch of new improved instrument system Version 3-Pending development. The other part of their promise is the quint year distribution and license contract with Careway Inc. Under this agreement Careway will have the right to market and distribute their proprietary instrument systems developed in conjunction with SolvGen. SolvGen is responsible for producing the necessary volume to meet the demand requirements of CareWay after each product launch. The company is responsible to maintain adequate inventory and deed quality control to meet client requirements. 2) Based on the generally accepted accounting conventions (GAAP) it is common practice to use the revenue recognition principle which states that any contemporary revenue has to be recognized in the accounting period on which it is earned. Therefore a company cannot realize as current revenue any payments that are part of a long term contract these payments should be differed and systematically recognized over the remaining time of the agreement or contract.