Financial Questions at Cherry Limited Essay

There are few criteria that are not satisfied in a proper way in the example of Cherry Limited. First of all, we cannot be sure that the amount of revenue from sales under the terms of credit program can be measured reliably, because all our calculations can be only based on some forecasts. We mean that the company just cannot know exactly how many consumers will pay on time and how many will not. And also we do not know the possible amount of the company's revenue that can be got from chargeable interest.

The situation is also exacerbated by the fact that the company does not have a similar experience. And it does not have data that can be a good basis for reliable forecasts of sales in the circumstances of such credit program.

The other criterion is that it is possible that the economic benefits associated with the transaction will flow to the seller. The same problem occurs. The company cannot exactly know how many customers will in fact pay the entire price and when they will do it. All calculations are based on some degree of possibility.

In general, under this credit program nothing can be measured reliably. And, as for us, that is the biggest contradiction in this particular case.

Even more difficult contradictions are with accounting for accrued interest. According to the accounting standard, the criteria for the recognition of revenue from accrued interest are pretty similar to the general criteria of recognition of revenue from sales.
As we have already mentioned, the company is not able to evaluate reliably the amount of possible revenue from accrued interest. Taking into account the all mentioned considerations, we believe that the sales and revenue from sales and accrued interest should be recognized on the delivery of goods to the customers and then adjusted, taking into account the possible charged interest.

Taking into account the terms of Cherry Limited credit program, it is difficult to evaluate reliably the amount of possible economic benefits for the company.

A good and successful essay for sale can be purchased at our essay writing service. All the papers are written by the professionals.

This post was brought to you by Colin Debrow.