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Revenue Recognition for a Services Contract
內容大綱
On November 25, 2012, the head of Revenue Recognition at ESol Limited (ESol) India was preparing for a meeting with the company’s sales team at the head office in Bangalore. ESol Limited was a large, U.S.-based multinational information technology corporation, which had moved into India in 2000. Since then, its management had insisted on the need for close monitoring of accounting procedures in strict adherence to Generally Accepted Accounting Principles. Although the sales team had negotiated the Request for Proposal with MoveForward, a large research firm in India handling and processing high volumes of sensitive data, in good faith, the revenue recognition team felt that clauses dealing with penalties, liquidated damages and termination put their company at risk and wished to defer all of the revenue proposed for the contract until these issues were resolved. The friction between the two teams put the entire deal in jeopardy.
學習目標
The case is intended for management students in courses on advanced financial accounting or on business-to-business (B2B) sales management. It will help them understand:<br><ul><li>Revenue recognition issues in a services contract and accounting solutions for the same.</li><li>The integration of sales and accounting functions in a large organization.</li><li>Customer negotiation skills in resolving revenue recognition issues in a services contract.</li><ul>