From the Archives: “Revenue Recognition Bulletin Vol. 1 No. 1”

By Paul Arne and Ross Albert

This Morris, Manning & Martin Revenue Recognition Bulletin reviews case developments in the Rev Rec area and identifies practical suggestions for addressing these developments.

On January 12, 2004, Computer Associates International (“CA”), one of the world’s largest software companies, announced that it had received a so-called “Wells Notice” from the staff of the SEC. The SEC’s Division of Enforcement issues a Wells Notice when it plans to recommend an enforcement

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Implementing a Revenue Recognition Plan

by John Yates

 

Introduction

This memorandum provides practical pointers for technology companies and their professional advisors to consider in view of the impact that accounting guidelines, industry practices, and other revenue recognition requirements may have on their business. In many cases, these pointers will help to reduce the amount of time required to respond to future inquiries from third parties and accountants regarding a company’s understanding and implementation of revenue recognition policies.

1. Determine Revenue Recognition Goals.

The technology company should determine whether its goal is to recognize revenue as soon as possible or defer the recognition of revenue. If the goal is

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