Revenue Recognition SWAPPING INVOICES/POs 2677
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I am new to SOX and have a question on the following:
Both companies are registered traded companies.
Sales Rep from CompanyA Tells Company B to issue a PO for X dollars and Company A in return will pay (USDUSD) dollars from a marketing fund to reduce the cost that Company B will pay for the services. So company B is only paying X-(USDUSD). Company A recognizes revenue for X. However, company B is only paying X-(USDUSD).
Is this a SOX violation or revenue recognition issues?
Mr. Chong Noi
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From what you describe Company A should recognise revenues of X -(USDUSD) being the net revenue, this would be the correct treatment if you regard the (USDUSD) as a sales rebate.
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Your description of the situation is not totally clear. For example consumer goods manufacturers sometimes grant a performance discount to their customers (e.g. supermarkets) if they perform certain promotional activities (posters, leaflets, in-store positioning of the product, TV or radio commercials, etc.) or reimburse a part of the expense for this advertising.