Document your final conclusion about the accounting treatment of this transaction between Longeta and Magicon. Be sure to provide a basis for your conclusion.
What will be an ideal response?
Longeta’s recording of this sales transaction violated GAAP related to revenue recognition. First, neither Longeta nor Magicon had reached agreement on the terms and conditions of the sale. Thus, no evidence of an arrangement for the transaction exists. Second, the separate agreement gives Magicon
full right of return. Thus, no exchange of assets has taken place, given that Magicon has no commitment
to provide Longeta anything. Third, the separate agreement notes that if no terms can be finalized,
Magicon has no obligation to pay Longeta. Thus, no collection would be expected in that event. As a
result, both the recording of the $5.8 million in revenue and the $1.2 million in deferred revenue are
not in accordance with GAAP.
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The Federal Trade Commission:
A. prohibits the inclusion of restrictions on franchisees in the agreement. B. requires franchisors to explain the termination, cancellation, and renewal provisions of the franchise contract. C. requires franchisors to disclose the number of franchisees terminated in the last five years. D. prohibits certain contract provisions and franchisee practices thought to be unfair to franchisors.
Which of the following is true about determining whether someone working for another is an
independent contractor or an employee? A) The classification of the person doing the work depends on if the person is also an agent. B) The classification of the person doing the work depends on a number of factors, with no single factor being any more important that the others. C) The classification of the person doing the work depends on that person's job title. D) The classification of the person doing the work depends on whether the parties to the arrangement consider the person doing the work to be an employee or independent contractor.
If funding is available to purchase additional resources, then a decision maker must recommend that the company invest in resources represented by:
a. A binding constraint. b. A non-binding constraint. c. A non-negativity constraint. d. None of the above
The factors that arbitrators use when deciding cases are the wording of the labor agreement, the submission agreement, the testimony and evidence offered, and
A. arbitration of witnesses. B. the concept of reasonable doubt. C. arbitration criteria or standards. D. the ability to set precedent.