Fasb Asc Project Essay

1937 Words Nov 18th, 2012 8 Pages
FASB ASC Project 1. The inventory at your company consists of computer software that the company has developed and is selling. You capitalized (rather than expensed) the cost of duplicating the software, the instruction manuals, and training material that are sold with the software. FASB ASC CITATION: Product Masters 985-330-25-1 The costs incurred for duplicating the computer software, documentation, and training materials from the product masters and for physically packaging the product for distribution shall be capitalized as inventory on a unit-specific basis. Answer 1: According to the FASB Codification, a completed version, ready for copying, of the computer software product, the documentation, and the training …show more content…
* e. The seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer. f. The amount of future returns can be reasonably estimated (see paragraphs 605-15-25-3 through 25-4). Because detailed record keeping for returns for each product line might be costly in some cases, this Subtopic permits reasonable aggregations and approximations of product returns. As explained in paragraph 605-15-15-2, exchanges by ultimate customers of one item for another of the same kind, quality, and price (for example, one color or size for another) are not considered returns for purposes of this Subtopic.

Answer 3: According to the FASB Codification, revenue from the sale should not be recognized at the time of sale, unless all of the six following conditions are met: (1) The seller’s price to the buyer is substantially fixed or determinable at the date of sale. (2) The buyer has paid the seller, or the buyer is obligated to pay the seller, and the obligation is not contingent on resale of the product. (3) The buyer’s obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product. (4) The buyer acquiring the product for resale has economic substance apart from that provided by the seller. (5)

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