11. Revenue Recognition You work for Tiger’s Door, a publicly traded movie produ

Question

11. Revenue Recognition You work for Tiger’s Door, a publicly traded movie production company. Tiger’s Door plans to release ‘‘Star Fight,’’ a children’s action movie, toward the beginning of the next period. To promote the lm, Tiger’s Door has arranged to include promotional toys in children’s meals sold by Cluckin’ Hen, a national fast food chain. The CEO wants to recognize licensing fee revenue from the fast food arrangement as it is realized, explaining that he sees no reason to delay such recognition. The CFO wants to delay recognition until the release of the lm, reasoning that toy revenue is a ‘‘byproduct’’ of the related lm, and recognition of that revenue should wait until release of the lm. Research the appropriate Codication and draft a memo explaining whether either the CEO’s or the CFO’s proposals are valid under U.S. GAAP and citing your references.

Explanation / Answer

Answer: I think CFO Proposal is correct because As par Revenue recognition:

The staff believes that revenue generally is realized or realizable and earned when all of the following criteria are met:

First the film is released than we recognise the revenue according to concepts.

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