Penciling out.Hopefully, something got lost in the translation in your discussion of side deals in the Sept. 27 article "There's No One Right Answer in the Math of Business Finance." Pursuant to generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , if a company enters into an arrangement that is contingent upon the buyer being able to resell the delivered product, the transaction is a consignment sale consignment sale auction sales of consignments of breeding cattle which are excess to the owner's requirements. . Revenue cannot be recognized until the product is resold by the manufacturer's customer. "Creating a side arrangement allows the company to get the full value of the deal" is completely contrary to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and misleading. Under any circumstances, it is not appropriate to recognize revenue on a consignment sale at the time of shipment. Albert Rossi Partner, Rossi Doskocil & Finkelstein LLP LLP - Lower Layer Protocol Long Beach |
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