Case 1.6

A) In general, what is the policy of Alexander and Baldwin for recognizing revenue?

“In general the company recognizes revenue when persuasive evidence of an arrangement exist, delivery of the service or product has occurred, the sales price is fixed or determinable, and collectability is reasonably assured.” (Gibson, 2013)

B) Voyage Revenue Recognition: Revenue recognition – “commonly referred to as the percentage-of-completion method.” “Voyage expenses are recognized as incurred.” Could this represent a challenge when matching cost revenue? – Yes this could present a challenge when matching cost with revenue. There could be a situation here because expenses are incurred about the same rate as the recognition or revenue.

C) Logistics Services Revenue Recognition: “Revenue and the related purchased transportation are recognized based on relative transit time, commonly referred to as the percentage-of-completion method.” Does this appear to be reasonable? Yes it appears to be reasonable as it appears to be a type of percentage of completion method.

D) Real Estate Sales Revenue Recognition: There appears to be two methods used for revenue recognition for real estate sales. Describe the two methods.

1) Generally on closing date, adequate initial and continuing initial investments have been received, and collection of remaining balances, if any, is reasonably assured.

2) Percentage of completion method is used when certain development projects have material continuing post-closing involvement and for which total revenue and capital costs are reasonably estimable.

E) Real Estate Leasing Revenue Recognition – Describe this method. Real estate leasing revenue is recognized on a straight-line basis over the life of the term set out on the lease. The revenue that is related to the contingent sales is recognized only after the contingency has been resolved.

“As far as the new revenue recognition policy. In May 2014, the FASB issued...