More information about the TRG, including instructions for submitting a potential implementation issue, is available here. For instance, GAAP allows for several different ways of valuing inventory goods held for sale in the ordinary course of business.
Internal users often need more detailed information than external users, who may need to know only the company's value or its ability to repay loans. Recognition of the revenue usually happens when it is realizable, rather than when it is realized although in a cash sale the two usually happen simultaneously.
The materiality principle states that an accounting standard can be ignored if the net impact of doing so has such a small impact on the financial statements that a reader of the financial statements would not be misled. Another one of the fundamental principles of GAAP is that the economic entity, the business, is a going concern.
However, if the customer signs a sales agreement and title to the item passes to the buyer, there is a legal obligation for the buyer to pay and the revenue becomes realizable.
Any stakeholder can submit a potential implementation issue for discussion at TRG meetings. Although some assets may be overstated, and some, like land, may actually be understated in terms of their actual fair market value, the FASB has determined that reporting assets at their historical cost serves the combined principles of consistency from firm to firm and from year to yearobjectivity, and conservatism.
Under International Financial Reporting Standards IFRSthe company would be allowed to restate and report the land at fair market value, if that could be established with any certainty usually by comparing the asset to current sales of similar assets.
The supply of fiber optic capacity far exceeded demand and prices were actually dropping around the country. The bonus is paid in based on results of operations as shown on the audited financial statements.
Many companies adopt a fiscal year that allows them to process transaction, like sales returns, letting the holiday dust settle before trying to manage the timing and recognition of both year end sales and expenses.