Consider the following excerpt:

From the TSA case, provide one example of each assertion that the revenue recognition process is (a) complex to manage, (b) prone to error, (c) material to financial statements, and (d) a top fraud risk.

Revenue recognition is a complex process because timing of revenues recorded under accrual accounting frequently differs from cash flows, and contracts may contain multiple performance obligations that are satisfied at different points in time. Under ASU 2014-09, recognition of revenue involves five distinct conceptual steps. Each of these steps has multiple dimensions, e.g., Step 1 contains five different criteria, each of which must be separately assessed. Students' answers may vary, and include:

Revenue recognition relies on managerial judgments and estimates. For example, judgment is needed on the collectability of monthly license fees to be received far in the future from individual customers in order to estimate TSA's revenues. Estimates of stand-alone...

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