Case Solution for Revenue Recognition for a Services Contract

Case Solution & Analysis for Revenue Recognition for a Services Contract by Pratibha Wasan, David J. Sharp.

Complete Case details are given below :

Case Name :      Revenue Recognition for a Services Contract
Authors :           Pratibha Wasan, David J. Sharp
Source :              Ivey Publishing
Case ID :           9B15B005 / W15288
Discipline :        Accounting
Case Length :    13 pages
Plagiarism : NO (100% Original work)
Description for case is given below :
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.
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