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Case Study Assignment Questions The case is on revenue recognition at Harvard Business Publishing. Although this is a US company, the revenue recognition model is generally the same under the US GAAP...

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Case Study Assignment Questions
The case is on revenue recognition at Harvard Business Publishing. Although this is a US company, the revenue recognition model is generally the same under the US GAAP and Australia accounting standards (AASB). Please apply AASB in the case analysis.
The assignment is to be prepared using Times New Roman 12-point type with single line spacing on A4 paper with 2.54 cm on each margin.
A maximum of 3 pages including the reference list and appendix (if any). Anything over 3 pages won’t be read or marked.
Individual Case Study Assignment Instructions
The financial reporting case study is a comprehensive case study which examines the specific application of case scenarios involving Topic 4 Revenue recognition. The case will also be used to examine student report writing skills, general accounting knowledge, and ability to critically evaluate complex case scenarios.
Consultation in relation to the case study
Criteria & Marking:
A full marking criteria sheet is attached at the end of this assignment. Review the ru
ic before you commence work to ensure you understand the requirements of the assessment and how it will be assessed.
Weighting: 20% of final grade (50 marks).
Format: The assignment is to be prepared as a PDF document using Times New Roman 12 point type with single line spacing. A ‘Formal Report’ structure with an Executive Summary and Table of Contents is NOT required given the
evity of the required information.
Length: A maximum of 3 pages (includes the reference list, on A4 paper with 2.54 cm on each margin). Any submitted text exceeding this limit will NOT be assessed.
Referencing style: Use APA referencing for any in-text references other than AASBs and for the reference list. For the in-text referencing from the accounting standards (AASBs), you must cite the specific provisions including paragraph from the relevant AASB. You are required to reference using either of the following 2 formats:
· AASB 102:12 

· AASB 102 para. 12 

However, do not reproduce significant parts of the regulation. The focus should be on interpretation and application of the standard.
Accounting Standards and Referencing
Make sure you use the cu
ent standard (not the old one) or your referencing and content will not be co
ect which will affect your analysis mark.
If you refer to standards, take care not to simply ‘dump-in’ large sections of the accounting standards. It is the interpretation that is important.
If you use large sections of the standard you will go over the page limit.
In the first instance an AASB is used in a document, you should provide its co
ect and full title and thereafter you can a
eviate. For example:
in the first instance AASB 16 Leases
thereafter you can just use AASB 16
What goes in an appendix generally?
Anything that is NOT important and you don’t care if the reader (marker…) doesn’t read it…
Nothing that is important and integral to your analysis and you want the reader (marker…) to read (mark…) it……
Do not put any analysis in the appendix
In this case study, there is very little need (if any) to use an Appendix.
Do not reproduce sections of the AASBs in the appendix.
Case Study (report)
Examine a situation
• Identify positives and negatives
• Make recommendations
• Professionals - not always academics
• Politicians
• Public
•Factual
•Authoritative
•Concise
•Easy to follow
Answered Same Day Sep 29, 2021

Solution

Vasudha answered on Oct 06 2021
151 Votes
Revenue Recognition at HBP
Revenue Recognition at HBP
Q1 Analysis:
5 step model of Revenue Recognition.
    Steps
    HMM11
    HMM12
    1.Contract
    There was no contractual obligation which defined properly, to include all the services. Revenue was recognized upon delivery.
    Identifying the contract more importantly with the payments terms and collectability of the consideration in cu
ent financial year.
    2.Performance Obligation
    There was no proper contractual and performance obligation. Performance obligation was defined as a whole contract, not in terms of accounting years.
    The promise was explicitly defined for the performance obligation like multiple accounting years.
    3.Contract Price
    Contract price was separated as License fees and webhosting fees and some of the ad-hoc services were not defined.
    Contract price is more clearly determined as license fee, which is inclusive of related services like new releases, webhosting etc.,
    4.Allocate Price
    Price was allocated as license fee, webhosting fee and releases separately.
    Price is conclusively allocated as license fees.
    5.Recognize Revenue
    Contract amount was recognized in the year of receipt in full.
    Revenue was recognized over multiple years as per the contract. Defe
ed revenue concept is used.
The 5 step model, Cited in “AASB 15- New Revenue Standard from Jan1, 2018” KPMG – Australia. https:
home.kpmg/au/en/home/insights/2017/04/introducing-aasb-15-revenue-standard.html
Q2 Analysis:
Recognition of revenue in HMM11 and HMM12.
HMM11: The business model was, client hosted the software on their servers and client was responsible for all the maintenance and operating cost of webhosting. Thus there is no fixed revenue from these services apart from revenue from fixing software bugs, updates and new releases. HBP also entered into licensing of its software to the client and this licensing fee was recognized as revenue at the initiation of the contract, although it was a multi-year contract.
The hosting fee which was 10% of the license fee was treated as non-refundable deposit and treated as defe
ed revenue and over the period of the contract and as per the service provided was...
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