ERIC Number: ED461632
Record Type: RIE
Publication Date: 2001-Jun-1
Reference Count: N/A
Recognizing Revenue under SAB 101: A Case Study Approach.
Casabona, Patrick; Shoaf, Victoria
The primary cause of enforcement proceedings by the Securities Exchange Commission against U.S. businesses resulted from inappropriate revenue recognition procedures used to inflate income. The concern with revenue recognition improprieties led the SEC to issue Staff Accounting Bulletin No. 101 (SAB 101) in 1999 to clarify existing Generally Accepted Accounting Principles related to revenue recognition. Because of many questions regarding the appropriate application of SAB 101, the SEC published further guidance in the form of a Frequently Asked Questions and Answers (FAQ) document. This paper presents a methodology for teaching some of the most important requirements in SAB 101. The methodology uses questions and answers to introduce the main concepts and principles included in SAB 101 and case study problems to explain the major requirements in SAB 101 and how they are applied in practice. It focuses on key provisions for recognizing revenue under SAB 101, revenue recognition topics covered in SAB 101, and frequently asked questions related to persuasive evidence of an arrangement, delivery and performance, fixed or determinable sales prices, and income statement presentation (gross versus net presentation of revenue in the income statement). An appendix presents six case studies on revenue recognition criteria in SAB 101 and solutions to each case. (SM)
Publication Type: Reports - Descriptive; Speeches/Meeting Papers
Education Level: N/A
Authoring Institution: N/A
Identifiers: Securities and Exchange Commission
Note: Paper presented at the Interactive Teaching Across Disciplines and Cultures Conference (Lund, Sweden, June 17-20, 2001). Contains small print.