Scribd Logo
Upload

Welcome to Scribd!

  • 445 views

    ACCT7102 Case Study Questions 18022014

    Uploaded by

    Sara Feng
    This document provides instructions for a case study assignment on revenue recognition and accounting for FOB sales. Students must complete the assignment individually and will be assessed on their understanding of accounting standards, analysis, and professional writing skills. The assignment involves answering three questions regarding how Biovail Corporation should recognize revenue from different sales contracts, the impact of a truck accident on revenue, the company's treatment of analysts, and ethical considerations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    ACCT7102 Case Study Questions 18022014

    Uploaded by

    Sara Feng
    445 views3 pages
    This document provides instructions for a case study assignment on revenue recognition and accounting for FOB sales. Students must complete the assignment individually and will be assessed on their understanding of accounting standards, analysis, and professional writing skills. The assignment involves answering three questions regarding how Biovail Corporation should recognize revenue from different sales contracts, the impact of a truck accident on revenue, the company's treatment of analysts, and ethical considerations.

    Original Description:

    financial accounting

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides instructions for a case study assignment on revenue recognition and accounting for FOB sales. Students must complete the assignment individually and will be assessed on their understanding of accounting standards, analysis, and professional writing skills. The assignment involves answering three questions regarding how Biovail Corporation should recognize revenue from different sales contracts, the impact of a truck accident on revenue, the company's treatment of analysts, and ethical considerations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    445 views3 pages

    ACCT7102 Case Study Questions 18022014

    Uploaded by

    Sara Feng
    This document provides instructions for a case study assignment on revenue recognition and accounting for FOB sales. Students must complete the assignment individually and will be assessed on their understanding of accounting standards, analysis, and professional writing skills. The assignment involves answering three questions regarding how Biovail Corporation should recognize revenue from different sales contracts, the impact of a truck accident on revenue, the company's treatment of analysts, and ethical considerations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 3
    At a glance
    Powered by AI
    The case study examines revenue recognition and FOB sales accounting for Biovail Corporation. It involves analyzing relevant accounting standards and critically evaluating complex case scenarios. Students are expected to independently prepare their assignment and avoid plagiarism.

    Under FOB Biovail, ownership and revenue are recognized upon shipment. Under FOB Destination, ownership and revenue are recognized upon delivery. The truck accident would decrease Q3 revenue under FOB Destination but not FOB Biovail since title had already passed.

    Biovail was likely focused on the revenue impact to manage analysts' expectations and incentives. Academic research shows managers are incentivized to manage earnings to meet targets.

    ACCT7102IndividualCaseStudyAssignment:

    BiovailCorporation:RevenuerecognitionandFOBSalesAccounting

    TaskDescription:
    The financial reporting case study is a comprehensive case study which examines the
    specificapplicationofcasescenariosinvolvingprincipallyTopic5(Managerialincentivesfor
    financial statement management).The case will also be used to examine student report
    writing skills, general accounting knowledge, and ability to critically evaluate complex case
    scenarios.

    Thecaseistobeundertakenindividuallyandstudentsshouldindependentlypreparetheir
    assignment. All cases will be reviewed for plagiarism and independent content. The
    Universityhasadoptedthefollowingdefinitionofplagiarism:
    Plagiarism is the act of misrepresenting as one's own original work the ideas,
    interpretations, words or creative works of another. These include published and
    unpublished documents, designs, music, sounds, images, photographs, computer
    codes and ideas gained through working in a group. These ideas, interpretations,
    wordsorworksmaybefoundinprintand/orelectronicmedia.
    Students are encouraged to read the UQ Student Integrity and Misconduct policy
    (http://ppl.app.uq.edu.au/content/3.60.04studentintegrityandmisconduct) which makes
    a comprehensive statement about the University's approach to plagiarism, including the
    approved use of plagiarism detection software, the consequences of plagiarism and the
    principlesassociatedwithpreventingplagiarism.

    Criteria&Marking:
    Afullmarkingcriteriasheetisattached.Ingeneral,thecasewillbeassessedbasedon:
    accuracyofanswerandinterpretationofrelevantaccountingstandards;
    presentationofathoughtfulandwellsupportedanswer;
    clarityofanalysis;and
    professional presentation including grammar, spelling, punctuation. This will also be
    judgedbasedonitsuitabilitytobepresentedtoafeepayingclient.

    Weighting:25%offinalgrade.

    DueDate:By4:00pm,Thursday29May2014.
    Items (for which no extension has been granted) submitted after the due date and time,
    incur a late submission penalty. The penalty is at the rate of 5% (0.4 of a grade) of the total
    availablemarksforthatparticularpieceofassessment,foreachcalendardayorpartthereof
    thattheitemisoverdue.

    Length:Thewordlimitisstrictly15001800words(excludingareferencelist).Anymaterial
    exceedingthewordlimitwillnotbereadandthemarkfortheassignmentwillbebasedon
    thematerialuptothepointwherethewordlimitwasexceeded.

    Referencing style: The appropriate referencing style is that used within any of the top
    accountingjournalssuchastheAccountingReview,JournalofAccountingResearch,Journalof
    Accounting and Economics, and Accounting, Organizations and Society. All of these journals
    areavailableonlinethroughtheUQLibrary.

    CaseStudyAssignmentQuestions
    ACCOUNTINGISSUESANDRESEARCHCOMPONENT
    REVENUERECOGNITION
    QuestionOne(Totalmarks:24)
    (a) How should the company recognise revenue based on the two possible Free on
    Board(FOB)contractstructuresmentionedinthecase?Explain.
    (9marks)

    (b) There was dissention between the Distributor and Biovail over when title to the
    shipment of Wellbutrin
    R
    passed. How does the accident affect the stated revenue
    under the two different FOB contract structures? Explain. (Hint: As part of your
    answer,completethefollowingtable).
    (6marks)
    FOBBiovail FOBDestination
    Ownershiptransfers?
    (e.g.upondelivery)

    Revenueisearned?
    (e.g.uponshipment)

    Assumingthattherewas
    noaccident,onwhich
    datewouldrevenuebe
    earned?
    (e.g.1August)

    Whatwasthestatusof
    therevenuewhenthe
    truckaccidentoccurred?
    (e.g.notearnedbecause
    titlehadnotpassed)

    Whatwastheeffectof
    thetruckaccidenton
    quarter3revenue?
    (e.g.decreased)


    (c) Inlightofyouranswerto(b)above,inyouropinion,whywasBiovailfocussedonthe
    amountofrevenueimpactofthetruckaccident?Explain.(Hint:Youranswershould
    be supported by reference to at least two to three academic research articles.
    Concentrate on the general results of the articles. You do not have to completely
    understandthestatistical/econometricmodels).
    (9marks)

    THERELATIONBETWEENANALYSTSANDCORPORATEMANAGERS
    QuestionTwo(Totalmarks:18)
    (a) How would you describe the Biovale Corporations treatment of Mr Treppel, the
    analystwhoissuedthreedowngraderecommendations?Explain.
    (3marks)

    (b) DoyouthinkthistreatmentofMrTreppelisactuallyrepresentativeofthebehaviour
    of Biovail and its executives toward other analysts who cover the stock? Explain.
    (Hint:ConsiderthelikelyreasonsforMrTreppelstreatment).
    (6marks)

    (c) AnalystsfromJPMorgannotedthat(casestudy,p.3):
    (ii)Biovailslowqualityearningsinthepastshouldnotbenewstothosefamiliar
    withBiovailand(iii)poorearningsqualitydoesnotequalbadaccounting.

    Explainwhatismeantbythiscomment.(Hint:Youranswershouldbesupportedby
    referencetoatleasttwotothreeacademicresearcharticles.Concentrateonthe
    generalresultsofthearticles.Youdonothavetocompletelyunderstandthe
    statistical/econometricmodels).
    (9marks)

    ETHICAL
    Question3(Totalmarks:6)
    What should management of Biovail have done differently? Explain, including a
    considerationofthepossibleconsequencesofthealternateactions.

    You might also like