Revenue Recognition & Fob Sales Accounting

Contents

INTRODUCTION & ISSUE 2

ANALYSIS OF DATA 3

Qualitative Data 3

Quantitative Data 4

RECOMMENDATIONS 4

Quantitative Investigation 5

Qualitative Investigation 5

Learn the effect of truck accident 5

Exchange and discuss opinion with other analysts 5

ACTION PLAN 5

INTRODUCTION & ISSUE

Biovail Corporation was a Canadian pharmaceutical company, operating internationally in all aspects of pharmaceutical products which is development, manufacture, marketing, licensing, and distribution of pharmaceutical products for the treatment of chronic medical conditions. Its major production facility was located in Steinbach, Manitoba, Canada. It merged with Valeant Pharmaceuticals International in 2010.

From this case, the main issue was David Maris wanted to make sure he was giving the best advice to his investment clients so he wanted to issue an appropriate stock recommendation report. He suspects that Biovail Corporation might have manipulated the result of their financial statement. This refers to fraudulent accounting of Biovail Corporation. David Maris, an analyst at Banc of America Securities (BAS) has investigate that Biovail might have significantly overestimated the amount of Wellbutrin XL on the truck.

Maris was aware that Biovail was the first time missed its quarterly guidance if compared to the past time. The company stated in its press release that the loss of revenue and income was associated with a significant in-transit shipment loss of Wellbutrin XL, Biovail antidepressant product, due to a traffic accident that contributed significantly to this unfavorable variance.

Biovail will not be recording any revenue associated with this shipment in Q3 because is not yet known whether or not the product involved in the accident will be salvageable. This product must be sent back to our manufacturing facility for careful inspection to determine if the product still meets all applicable manufacturing specifications and is...