Revenue expense = profit = net income GAAP basis not a cash basis expenses when they are incurred

and revenues P 155- groupons revenue recognition policy. They were including the gross profits without accounting for the funds that they were paying back to the vendors. (prior to IPO) Revenue recognition policies page 142 1. when its realized(when the cash comes in.) or realizable (when its earned. You provide the service you send out the bill) and 2. when it is earned the SEC adds some additional parameters Lists a few factors: Persuasive evidence of an arrangement contract/invoice Delivery performance prior dealings Collectability ability to collect becomes less and less certain? How far out is the debt. Debt more than 3 months old not good. Have to take a bad debt expense. Ship sinks what about the widgets. Creature of contract. Where does title pass? Are the recognizing prematurely. Passing a title is a key element of revenue recognition. Ex. At the end of dec. sunbeam would ship out g. foreman grills even though they weren t ordered by the big retailers (kmart/walmart) if you don t sell them we will take them back in January. If you don t sell them ship them back to sunbeam. Bill and hold scam. Companies would ship goods to their warehouses and says that they were shipping. Ficticous revenue and title not passing. 169 aided and abetted sale of software transaction didn t conform with GAAP because it was conditional filed restatement 8-k and reversed the revenue its like waiving a red flag in front of the SEC. they recorded the sale but it never went through. It had to be approved by the school board that never happened. What was the relief that the SEC was seeking? Enjoin for future violations Civil penalty Disgorgement maybe he got a bonus from the false earnings John isselmann Lawyer 35 cease and desist by the SEC. 2 different ways 2 ways that the SEC can bring an action federal court or in house through their own actions. The more egregious more likely to go federal. Do you include pension expenses.

Its not purgery. One last chance statement. In a criminal case you don t have to testify. law. SEC can draw adverse interest. Criminal to lie.Pretty much accused of standing idly by Lying to an SEC official is lying to a government agent. Can be used against you in a civil case. SEC you have no claim against my client .

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