1 2 3 CLC Assignment: COMPANY ANALYSIS Group 3 Professor Stephen Weiss ACC. 371 January 31, 2021 Introduction The GAAP provided new guidelines regarding revenue recognition, in order to simplify the financial statements. The objective of the new guidance is to establish the principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers. This paper will discuss the revenue recognition criteria of various companies and how they comply with rules of FASB codification. The Analysis Microsoft Corporation: Microsoft corporation is the largest company that deals with the manufacturing and sale of electronic devices like iPhones, iPads, laptops and other extra devices in the world. It is the leading company in the production of personal computer software. Its financial statements signify a good performance in the investment sector. From the balance sheet, the short-term investments in the financial year 2020 were $136,527, in 2019 the investments were $133,819 and in 2018 the investments totaled to $133,768 this can be estimated to be 2.02%, 0.04% and 0.59% percentage growth of the company from the previous years, (Warren et al,, 2020). The notes show that the company has invested $150 in the production of more units of the electronic devices supplied. Investing in workforce and in the security exchange in the purchase of share in the stock exchange. An approximate amount of $100 was invested in the purchase of share and reinvestment of dividends in 2019, (Mayes, 2020). FASB which refers to the financial accounting standards board has laid out new policies that ought to be followed by every company. For instance, Microsoft corporation follows the principle of impracticability in its operations as required by FASB as it believes excessive costs are included in the principle, (Tysiac, 2018, p.105). Additionally, the company follows the exchanges productive assets which states that the accounting of non monetary transactions should be based on fair values of the assets. According to Microsoft corporation when non-monetary transactions lack commercial substance, they are exempted in accordance with FASB standards. Therefore, Microsoft has made investments in the company in both short-term and long-term investments and follows the FASB standards correctly when preparing their financial statements. Amazon: Amazon is the second most valuable company in the United States trailing Apple. The company is worth over $1.7 trillion and continues to grow. Amazon recognizes revenue when these four criteria are met, evidence of an arrangement or contract exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is assured (sec.gov). From there they determine if they should report the revenue as gross sales and related costs or the net amount as commission sales. When discount offers a ...