Audit

Please read the instructions attachment carefully. Please read the case which are attached as page 1 and page 2.

Requirements:

A descriptive title.
A short executive summary with a bulleted list of the main points.
One, two or (up to) three paragraphs for each for the 3 questions above
Write your document as if you writing to partner of your audit firm to document the audit file.

Answer the following questions: (I have attached useful information for each question to guide you on how to answer the question)

1.Review FASB Topic 606  – “Revenue from Contracts with Customers” to summarize the core principle for recognizing revenue and briefly describe the five steps needed to achieve the core principle.

2.Was the core principle of FASB Topic 606 achieve in this case situation? Explain your reason for why it was or why it was not.

3. In your own words, explain the company’s reasons for recording $5.8 million as current revenue while recording the remaining $1.2 million as deferred revenue. Please include in your explanation on which financial statement the deferred revenue account would be presented and why this is appropriate.

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