Informix Revenue Recognition

Note 2: Case 2 - Case 1 "Recognition of Software Revenue: Informix Corporation" GAAP compliant companies can manage revenue simply by changing accounting policies to select accounting principles that are beneficial to them. Entities have many reasons to choose the principle that can describe the most beautiful financial situation. Some people will argue that the market needs it, as reflected in the company's stock price penalty, the difference per share is only one cent less than previously estimated stocks.

The subject of this study was 'recognition of income based on US accounting standards and international financial reporting standards'. Revenue is the largest item in the financial statements and the problem of revenue recognition is the most important and difficult problem faced by standard setters and accountants. The revenue recognition requirement of US GAAP is different from the revenue recognition requirement of IFRS, both of which are thought to need improvement. US GAAP includes a wide range of revenue recognition concepts and a number of industry or transaction specific requirements that may result in different accounting for economically similar transactions. Although IFRS does not have much guidance on revenue recognition, the two main criteria, revenue of IAS 18 and construction contract of IAS 11, are difficult to understand and may be difficult to apply to simple transactions. In addition, there is no guidance on important topics such as revenue recognition of multi-factor contracts.

Recognition of revenue Recognition of revenue depends on specific facts and circumstances, as well as different industry-specific accounting principles and practices, so the auditor is usually based on the auditor's understanding of the company and its environment, including revenue composition Create an audit procedure. Attributes and industry-specific considerations If the identified fraud risk includes incorrect revenue recognition, the auditor should also consider the following:

Until now, the source of revenue for the entire lifecycle of sales varies depending on the business model, so recognition of revenue between industries will vary widely. For example, according to SaaS reports, revenue (mainly regular subscription fee revenues) is significantly different from earnings reporting methods used for traditional one-time sales. ASC 606 and IFRS 15 were created to standardize and coordinate the way in which all companies recognize revenue irrespective of industry or region. The new standard is the result of long-term collaboration between the Financial Accounting Standards Council (FASB) and the International Accounting Standards Board (IASB).