Accounting Case Study: Frantek and Conte

Paper Summary:

This paper discusses the Financial Accounting Standards Board (FASB) Statements of Financial Accounting Standards (SFAS) Nos. 48 and 49 and how these bulletins apply to the Conte company's agreement to purchase computer boards from the Frantek company and provide the financing necessary for Frantek to complete delivery to Conte in the form of a loan.

From the Paper:

"In the 1981 FASB No. 48, Conte agreed to purchase the computer boards from Franktek and to provide the financing necessary for Frantek to complete delivery to Conte in the form of a loan. FASB No. 48 states that the revenue received by Frantek from Conte in regards to the 38,000 boards needed to be recognized because "all of the conditions specified by the Statement are met." Concerning the 41,000 boards remaining in Frantek's inventory at the end of the year, the revenue had not been received, and therefore did not have to be recognized, until they had been delivered, ..."

Sample of Sources Used:

• FASB No. 48 (1981) Revenue Recognition When Right of Return Exists, http://www.fasb.org/st/summary/stsum48.shtml, accessed December 26, 2006
• FASB Action Alert 03-19 (2003) Action Alert Number 03-19, Financial Accounting Standards Board, http://www.fasb.org/action/aa051403.shtml, accessed December 26, 2006
• SEC Staff Accounting Bulletin No. 101 (1999) Revenue Recognition in Financial Statements, Release No. SAB 101, http://www.sec.gov/interps/account/sab101.htm, accessed December 26, 2006
• Siegel, Philip, Borgia, Carl (2006) The Measurement and Recognition of Intangible Assets, Journal of Business and Public Affairs, Vol. 1, Issue 1 http://www.scientificjournals.org/articles/1006.htm, accessed December 26, 2006

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