Introduction
Big Beans has entered into their transactions of stated sales. These transactions involve the accounting recognition of sales revenue. The accounting treatments of these three transactions have been reviewed in this write up taking into consideration the available Generally Accepted Accounting Principles (GAAP).
Sales with immediate delivery
Scenario: Immediately on harvesting 1,000,000 bushels of beans were sold to Grain Elevators at a price of $18 per bushel with immediate delivery.
1,000,000 bushels of beans have been @ $18 per bushel and the deliveries of bushels have been made immediately. Generally Accepted Accounting Principal (GAAP) with regard to recognition of revenue is covered by FASB Statement of Financial Accounting Concepts No.5.
As per paragraph 83 of said SFAC No.5, revenue “recognition involve consideration of two factors, a) being realized and realizable, and b) being earned, with some time one and sometimes the other being the most important consideration”. Both criteria are required to be accomplished before the revenue is recognized.
The revenue is treated as realized when cash is received for the sale of the product; and revenue is termed as realizable when a promise to pay is received and that be either verbal promise to pay or written in the shape of notes receivable. The transaction under consideration does not involve cash being received by Big Beans. That means revenue has not been realized at the occurrence of a transaction. Also, there is no indication of any written promise to pay as no notes receivable has been executed.
In the transactions, the bushels have been sold and transferred. Delivery plays an important role in the sale of goods transactions. On delivery of goods sales transaction gets completed and a claim to the realization of consideration arises. Accordingly, it can be said that on delivery of goods a non-written promise to pay accrues as the buyers accepted the delivery and have not paid cash. Therefore revenue is realized when the claim of recovery arose as a non-written promise to pay on acceptance of delivery of goods.
The second condition is that the revenue must be earned. Revenue is treated as earned when enforceable exchange takes place of considerations. That is to say, deliveries of goods have been given and a promise to pay has been received. In our transaction bushels have been transferred and a verbal promise to pay has been created on acceptance of delivery by Grain Elevators. Thus revenue can be said to be earned.
Again as per SFAC No.5 before recognition of a transaction four basic criteria namely, definition (meeting the basic element of asset or liability or change in equity), measurability, relevance, and reliability, are required to be fulfilled. As stated above on delivery of goods a claim to the recovery of consideration (which claim is an asset) has arisen. The transaction is measurable as its price is the current cost. The transaction is relevant as it can be evaluated in the context of financial reporting. We can calculate the value of the transaction. The transaction is reliable as it involves a debtor named Grain Elevators and thus representatively faithful. The transaction, therefore, meets all the four criteria of accounting recognition.
As all the four basic criteria of accounting recognition and the criteria of revenue recognition being realized and earned have been met, the transactions should be recognized immediately at the transfer of delivery bypassing the following Journal entry:
DR. CR.
Grain Elevators $18000000
Sales of Bean Bushels $18000000
Sales with delayed deliveries
Scenario: Sale of 500000 bushels @ 17.75 per bushel with delivery within next two months.
Looking from criteria provided under IAS 18 “revenue from sales of goods should be recognized when the following conditions have been satisfied:
The entity has transferred to the buyer the significant risks and rewards of ownership of the goods; b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; c)the amount of revenue can be measured reliably; d) it is probable that economic benefits associated with the transactions will flow to the entity; and e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.”(Technical Summary IAS 18)
In our transaction bushels have sold but deliveries of bushels will be made within two months. It may be noted that the transaction provides a specific number of bushels sold (500000 bushels) and also a specific sale price ($17.75 per bushel). Therefore the transaction is measurable reliably; it is also probable that economic benefits will flow to the buyer; and there are no other costs in respect of transactions. Accordingly, the transaction complies with criteria c), d), and e) mentioned above. But as the delivery of goods has not yet taken place. Therefore the seller Big Beans has not transferred risks and rewards of ownership to the buyer and also retains the usual managerial and effective control over bushels. That means criteria a) and b) are not immediately complied with; and those will comply with only on delivery of goods. Hence revenue cannot be recognized immediately. It will be recognized only at the time of the delivery of bushels to the buyer within two months.
Transaction without sale and delivery
Scenario: Recording revenue of unsold bushels at a current market price of $17.75 per bushel.
The revenue is not realized or realizable as there is no buyer. Also, revenue is not earned as there appears to be no enforceable exchange of considerations. Accordingly, the conditions of revenue recognitions as prescribed under SFAS no. 5 are not complied with.
The goods are lying with the owner and there is no contractual agreement of transfer of ownership, managerial, and/ or control rights. Therefore even the criteria prescribed under IAS 18 cannot be complied with.
As the transaction fulfills neither the rules framed under SFAS No. 5 nor it complies with the criteria of revenue recognition as stated under IAS 18, therefore it can be said that no sale or revenue transaction has taken place. There cannot be any accounting recognition, and the recording of revenue by Big Beans is uncalled for.
George Gmelch: Lessons From The Field
The current review deals with Gmelch’s article Lessons from the field initially published in Annual Editions: Anthropology. To understand the purpose and significance of this article one should pay attention to Gmelch scholarly background and the main directions of his studies. There is no denying the importance of the fact that George Gmelch belongs to the ‘cast’ of cultural anthropologists which lies on the intersection of various sociological, historical and cultural disciplines researching multi-faceted spectrum of issues connected with human beings.
Gmelch early research relates was conducted in Ireland and focused nomadic group which is known as Travellers and Tinkers. After that he had done extensive research into the problem of migration in Barbados, Newfoundland and Ireland, studied ecology of the salmon fisherman in Alaska, anthropology of the professional baseball player in the US and the issues of tourism in Napa Valley and Barbados. Gmelch is notable as the author of dozen of books and more articles.
As a cultural anthropologist pays specific attention to fieldwork and empirical examinations of different cultures including their customs and traditions. The utilization of these methods are central in his article named Lessons from the Field.
This article is made in the form of introduction of Anthropology students to fieldwork where they can receive their basic knowledge in ethnography, cultural science and other disciplines. There is no denying the importance of the fact that article includes basic recommendations and observations for the students which should be remembered starting active research in the field.
In the first place, Gmelch rightly suggests that anthropological knowledge is one the main components of modern humanitarian education without which it can be considered as full and effective. Gmelch continues that Anthropology students starting their field work presupposes that they already know basic anthropological theories, facts and rules which were acquired during their starting process. The knowledge of methodology, as Gmelch argues, is also very essential including such approaches as semiotic analysis of cultural artifacts, structural anthropology, cultural analysis, various quantitative and qualitative sociological methods. Without this kind of knowledge any field anthropological research may loose its focus and orientation.
One of the strengths of Gmelch article is extensive utilization of examples from his own experience.
For instance, he claims that when students start their anthropological fieldwork in some unknown cultural conditions, they become the reflection of students’ own cultural patterns and visions. As Gmelch notes cultural fieldworks in Anthropology often show sometimes egocentric and material prejudices and inclinations of the students which are so characteristic of American way of life. Many students experience real cultural shock when they meet the customs, way of life and tradition in their ethnographic fieldwork.
In this respect, one of the most significant contribution which Gmelch makes to the problematic of developing practical guidelines for anthropological research is developing methodology for avoiding student’s cultural shock which in its turn may cause negative impact for their practice and experience.
Gmelch rightly suggests that much of responsibility should be taken by the leader of research ethnographic group who should explain students various issues ranging from theoretical concepts to practical knowledge and conduct necessary psychological and field trainings. Unless this is not done, there is a risk that a fieldwork practice will transform into inefficient activity having no influence on students scientific and life experience.
The abovementioned analyses Gmelch proposes constitute the main components of article significance and contribution to the debates in anthropology, particularly the methodic and didactic issues which are crucial for creating professional specialists in this fields.
Notwithstanding these positive moments, one should mention some significant shortcomings of the article. It seems that author’s main points are not outlined in coherent manner and more resemble an essay with personal observation than a guideline for students in fieldwork which it was meant to be. These problems, however, could have been avoided if the author managed to more properly structure his abundant insights and thought and present them in a coherent and logical way.
Besides this, Gmelch often seems to neglect some important issues while focusing on unimportant details which not always looks adequate.
Besides this, one should point to some unclear and ungrounded statements which can be met in this text. Among other weaknesses of the article one should point to the absence of statistical and empirical data which is was needed in accordance with the logical sequence of Gmelch’s ideas. Many of the problems mentioned above could have been avoided in the case if Gmelch managed to organize his findings, empirical data in a proper way meeting the purpose of his research.
Notwithstanding these significant shortcomings, it should be said that in general Gmelch’s article may be considered as important contribution into anthropological and educational studies and may prove helpful for all students interested in fieldwork in anthropology and ethnography. Gmelch major achievements in anthropology which are easily seen in his earlier research considerably outweigh negative sides of analyzed research.
Gene Mutation: Progeria Analysis
Gene mutations are changes in the nitrogenous base pairs resulting in the false expression of protein due to false translation and transcription processes. Genetic mutations could be due to substitution, addition, deletion, inversion of base pairs that are caused by chemical or environmental factors. Genotypic alterations result in a change in the expression of proteins, thus, altering the phenotypic response.
One of the most typical and lethal demonstrations of a genetic mutation observed in the current era is that of ‘Progeria’- a disease that causes premature aging in infants (Secerbegovic, 1997). This disease is found once in every 4 million births and caused death usually by the early teens. This disease is caused by the mutation of a lamin-A gene, (LMNA); single nucleotide mutation is observed in this gene, thus causing autosomal–dominant expression in patients, which means that it is a ‘chance’ mutation, and will not be passed down in families.
As depicted in the studies conducted by Kris and his co-workers (2006), this segmental premature aging disease is caused by Hutchinson-Gilford Progeria syndrome (HGPS), named after the two scientists who discovered it in 1886. Travis (2003) describes that “Children with progeria are usually diagnosed 6 months to a year after birth when their physical development starts to lag. They rarely grow taller than 4 feet, and their heads are oversized for their bodies. The children become bald and have skin problems such as scleroderma. While their mental development is normal, children with progeria rapidly develop atherosclerosis and die, on average, at the age of 13”. Balding of the head and narrowing of eyebrows are observed, along with sunken eyes, a bead-like nose, and prominent head veins. They are observed to die of the same causes as observed in the old, like, cardiac arrest, high blood pressure, and are prone to have dislocated or loose hip joints, with atherosclerosis, as observed by Mazereew (2007).
The discovery of the gene that causes this fatal disease was discovered only in the recent past when a group of scientists working in the Progeria research foundation in the year 2003 as cited by many scientists and published in Nature, science, and many prestigious journals, (Mazereew, 2007). This promising revelation revolutionized and excited the scientific community, as a ray of hope was seen in curing or reversing this mutation, once the gene was identified.
As reported by Shurong (2005), Progeria is caused by a de novo single point mutation, by which the structural and mechanical properties of the nuclear lamina are altered. Specifically, a mutation in the Lamin A and C regions is observed due to the single point deletion of the nucleotide array. In his study, Shurong describes that “Lamin A protein is observed to be the structural scaffolding of the nucleus that holds it together, and is also involved in gene expression and DNA replication”.
A formidable study was conducted by Mark and his coworkers (2007) demonstrating the new approaches to Progeria, in which he shows by experimentation that out of the 664 amino acids being translated onto mRNA, the prelamin gene at exon 11 undergoes single nucleotide substitution, such that GGC becomes GGT at position 1824. He further explains in the paper that this mutation does not alter the protein sequence, as it is a ‘silent’ mutation; however, it results in the deletion of a 150- nucleotide stretch of the exon. This missing chain sequence causes the lethal disease by shrinking the laminar membrane of the nuclei.
These abnormalities can be ‘corrected’ employing RNA interference, as shown by Shurong. The ‘missing’ 150 base pair region can be manipulated in order to provide sufficient tensile strength to the nuclear membrane. However, lots of research inputs are required to further explore these options. Likewise, scientists are now studying the genetic mutations in LMNA of centenarians and comparing these mutations with patients who have progeria (http//www.progeria-research.org).
There is a dire need to dig deep in deciphering the exact cause as to why this mutation takes place and how it could be rectified. Until and unless resources are poured in, the tiring efforts by these talented researchers who have come so far will go to waste, and millions of children will continue suffering in silence. Even in this modern era, where science and technology have made quantum leaps toward its progress, it is indeed very heartbreaking to see the innocent die due to our ignorance. The scientific community should prioritize its objectives, in first saving young innocent live, enormous resources and efforts should be galvanized in solving this problem, as to how the disease could be ‘reversed’, this will definitely be a breakthrough advancement, where science would have actually saved lives. World wide programs should be launched, and with the huge potential available, in terms of scientific talent, efforts should be pooled, and it is high time that this lethal disease that has been prevailing for so long, killing millions each year, should be looked into, and be placed as number one, on every research agenda.
“Cultured human fibroblast nuclei demonstrating nuclear morphology. An Untreated normal control fibroblast. B, Untreated progeria fibroblast. C, FTI-treated progeria fibroblast 36 hours after treatment” (Kieran et al, 2007).
References
- S. Secerbegovic (1997) A hypothesis that aging results from defects in genetically produced proteins Medical Hypotheses 48, 531-533
- Shurong Huang, Lishan Chen, Nataliya Libina Joel, Janes, George M. Martin, Judith Campisi, Junko Oshima (2005) Correction of cellular phenotypes of Hutchinson-Gilford Progeria cells by RNA interference Hum Genet (2005) 118: 444–450
- Mark W. Kieran, Leslie Gordon, and Monica Kleinman, (2007) New Approaches to Progeria-PEDIATRICS Vol. 120 No. 4 2007, pp. 834-841.
- Progeria Research.
- Pediatrics.
- Kris Noel Dahl Paola Scaffidi, Mohammad F. Islam, Arjun G. Yodh, Katherine L. Wilson, and Tom Miste (2006) Distinct structural and mechanical properties of the nuclear lamina in Hutchinson–Gilford progeria syndrome PNAS vol. 103 no. 27,10271-10276
- J. Mazereeuw-Hautier, L.C. Wilson, S. Mohammed, D. Smallwood, S. Shackleton, D.J. Atherton and J.I. (2007) Harper Hutchinson–Gilford progeria syndrome: clinical findings in three patients carrying the G608G mutation in LMNA and review of the literature PAEDIATRIC DERMATOLOGY j.1365-2133.2007.07897.