Typically, revenue should be recognized when the control of the goods has transferred from the seller to the buyer or upon delivery of the goods unless it is a bill-and-hold sale. Therefore, another issue of this case is whether or not the transaction between CableCo and CoAx qualifies as a bill-and-hold sale.
Application of the Rules Several uncertainties and issues of this case come to light when referencing the aforementioned ASC rules. As outlined in ASC 606-10-25-1, the requirements for a contract to exist are clearly met between CoAx and CableCo. ASC 606-10-25-14 and ASC 606-10-25-30 clarify that CoAx owes CableCo …show more content…
If during the three months that CableCo’s warehouse is under construction, CoAx cuts, packages, and physically sets aside the specific amount of cable ordered by CableCo, they can recognize revenue at that point because all of the qualifications for a Bill and Hold Arrangement will then be met. If this occurs upon the day of delivery, then CoAx will have to wait until the day of delivery to recognize