In this case, students must identify and develop an understanding of the various revenue recognition issues in the sales agreement between Larson and Dynamic and connect them to the areas of authoritative guidance in the Financial Accounting Standards Board's Accounting Standards Codification® (hereafter, ASC or Codification), or the International Accounting Standards Board's International Financial Reporting Standards (hereafter, IFRS). These Teaching Notes identify the case facts that give rise to the revenue recognition/measurement issues, discuss the relevant guidance, and provide an accounting recommendation for each of the issues identified. Since students are asked to communicate the issues discovered in a formal memo, a sample rubric is also provided for instructors to use at their discretion.

In the following paragraphs, each issue is addressed with a brief background and a more in-depth discussion of the relevant case facts and authoritative guidance. When applicable, the discussion includes sample journal entries that would...

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