I need some assistance with these assignment. revenue recognition and lucent technologies, inc Thank you in advance for the help!

I need some assistance with these assignment. revenue recognition and lucent technologies, inc Thank you in advance for the help! Generally, one of the most reliable methods for revenue recognition is a critical event basis. When a critical event takes place within the operating cycle, such as a final sale, there are few questions regarding the recognition of the revenue. This more conservative method is “justified because the price of the product is then known with certainty. the exchange has been finalized by delivery of goods, leading to objective knowledge of the costs incurred” which allows the revenue from the transaction to be accurately recorded (Riahi-Belkaoui 45). This results in a faithful representation of the company’s underlying financial condition because it is unbiased and verifiable. In terms of the relevance of the information, the company may take the position that, since investors use the data to make decisions regarding timely investments, they should be given information that presents the company in the best possible light. This approach can result in more aggressive methods, like the ones used by Lucent, via a scheme of issuing credits to recognize revenue as soon as possible.&nbsp.

Revenue should be recognized at the final sale.

In the case of Lucent, the company’s actions demonstrate the worst aspects of ignoring conservative revenue recognition. They chose to use any means necessary to present investors with a positive picture. Lucent’s management decided that it was more important to show higher levels of income than engage in a faithful representation of true financial condition. The problem for Lucent was that investors were relying on the overstated revenues as a basis for owning the company’s shares, and when the true revenue numbers were revealed, the stock lost over five percent of its value. Management’s decision to massage the numbers toward the higher revenue representation was a poor one. This case demonstrates the down-side of tampering with information to meet sales goals so that investors will be, please. It is far better to use a reliable methodology. Lucent’s aggressive revenue recognition policies ultimately hurt the company because they were dishonest and biased.

When a vendor has an ownership interest in a customer, it is easier to engage in these practices. By using the leverage of customer ownership, Lucent could claim the revenues it originally reported while knowing that renegotiated terms would result in subsequent credits against that revenue. The issue is one of control. Rising to the level of collusion, Lucent could over-ship to its partner/customers, show the gross revenue on its financials, and then control the final customer cost through credits. The failure to book the impending credits, when management knew that such reporting would temporarily meet the sales targets but ultimately result in reduced revenues.

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10