First, Persuasive evidence of an arrangement exists.
We can see that there must be an arrangement between Avail and distributor. Second, the seller’s price to the buyer is fixed or determinable.Third, collegiality is reasonably assured. Fourth, Delivery has occurred or services have been rendered. From here, we could recognize revenue of the company according to FOB. FOB shipping point, title to the property rangers to the buyer when it leaves the shipping dock and therefore revenue should be recognized at that point. With FOB destination, title does not transfer to the buyer until they receive the goods and thus revenue is not recognized until that point 3.
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How does the accident affect the stated revenues under different FOB contract structures? Explain your reasoning? If Avail recognizes revenues when the product leaves Viola’s FOB shipping point then revenue should be recognized at that point. Therefore, the truck accident would have had no impact on Viola’s third quarter uncial results because the title to the product and the risk associated with the accident would have passed to the Distributor as soon as the truck left Viola’s.Then, overstating revenues and net income on financial statement should not have happened. However, Distributor mentioned that they recognized the distribution as FOB destination then revenue will only be received by Avail until goods arrived at the point, so if Avail recognizes revenue when the product has reached the Distributor’s FOB destination it has recognized revenue when it has been earned and ill accurately state revenues and net income on its financial statements. 4.Are you concerned about the company’s treatment of analysts who cover the stock? Would you want to be an analyst covering this company? Yes, I am concerned especially about the downgraded stock recommendation that was given to Avail. However, I would not be an analyst covering the company because there were too many misleading information in the company that would cause me as analyst to formulate wrong decision.
Moreover, it might also ruin my reputation as analyst if I formulated wrong decision.