ACCT 301

Each member of the group will select 1 question below. You may not select a question that has already been posted by another group member. Be sure that you clearly identify the question number you have selected.

1. Read Judgment Case 5-12 and answer it, considering also the biblical implications of this situation.

Judgment Case 5-12 Revenue recognition; long-term construction contracts

Two accounting students were discussing the timing of revenue recognition for long-term construction contracts. The discussion focused on which method was most like the typical revenue recognition method of recognizing revenue at the point of product delivery. Bill argued that recognizing revenue upon project completion was preferable because it was analogous to recognizing revenue at the point of delivery. John disagreed and supported recognizing revenue over time stating that it was analogous to accruing revenue as a performance obligation was satisfied. John also pointed out that an advantage of recognizing revenue over time is that it provides information sooner to users.

Required:

Discuss the arguments made by both students. Which argument do you support? Why: