Aviat`s response is an excellent example of an analysis of the control criteria in CSA 606. Aviat stated that two of its customers (“M” and “G”) make bill and hold transactions, and Aviat has a separate warehouse for each of these customers. Aviat submitted that these transactions meet all control criteria in CSA 606-10-25-30 (except for physical possession) and CSA 606-10-55-83. Aviat explains: The following example is an example of improper use of the base bill and hold for revenue recognition. In 1996, Sunbeam, a small appliance company, hired a turnaround specialist for companies to make the necessary changes to their financially troubled business. Al Dunlap, who was appointed managing director, used a bill-and-hold strategy, in addition to other fraudulent accounting techniques, to make Sunbeam`s financial performance better than it really was. As a result, Sunbeam`s share prices have skyrocketed. These changes to the “ball” regimes apply to private companies for the oldest periods beginning after December 15, 2018, but can already be applied earlier to periods beginning after December 15, 2017. In point 606, the new revenue recognition guide, there are two points to consider when dealing with sales and shooting agreements: the billing and holding regime can be beneficial to both the buyer and the seller, but both parties must be very careful that all criteria are met. If the agreement does not meet all of the criteria mentioned, there will be no transfer of ownership. This means that the turnover cannot be accounted for by the seller and the buyer cannot account for assets or stocks related to this transaction. Companies should assess whether the control was passed on to the customer both on the basis of CSA control criteria 606-10-25-30 and on the basis of the more specific billing and detention guidelines for paragraphs 55 to 83.
When control is transferred to the customer as part of a payment and takeover transaction, the vendor should use the instructions to determine whether a bond is “separated under the contract” to determine whether the backup or storage power is recognizable as a separate service obligation. The Bill and Hold base is an aggressive method of sales recognition. Therefore, strict conditions must be met to apply this type of revenue recognition. According to the Securities and Exchange Commission, it can only be used under conditions in which transactions meet a list of seven criteria.