Referencing Styles : APA The FASB and the IASB have recently issued a joint standard on revenue recognition. Although this standard is not yet applicable, given that your course has addressed only the new standard, please address all the requirements below, including FASB codification references, in accordance with the new standard. 1. (a) Are the criteria that Toshiba uses to decide whether or not to apply the percentage of completion method of accounting to a particular contract consistent with U.S. GAAP? Are they more or less stringent? Explain, citing authoritative pronouncements. (b) Do you believe that Toshiba’s contracting divisions faithfully and consistently applied the above criteria for use of percentage-of-completion accounting? Explain. (c) Under U.S. GAAP, is it permissible to (selectively) use the percentage of completion accounting method for some (but not all) contracts? (d) What is meant by inspection basis accounting? For Contract I described in the case, is Toshiba’s application of the inspection method consistent with the U.S. GAAP? Explain and cite authoritative pronouncements. 13 2. For the illustrative Contract X described in the case, compute construction revenues, expenses, and gross profit (or loss) for each year, and balances in the construction in progress, and provision for loss on contract accounts in the balance sheet at the end of each year. You should present the numbers according to Toshiba’s accounting, and the numbers according to U.S. GAAP in separate columns in Table 1 (Panel A), and support them with the appropriate journal entries for each year. All the amounts should be in millions of JPY. 3. Repeat requirement 1 above for Contract Y described in the case Table 1 below (Panel B). Journal entries are not necessary, however.