Crazy Computers Crazy Computer dealers fail to recognize as revenue the commission on the insurance premium they receive after selling these policies to consumers. The provisions of ASC 605 – 45 on revenue recognition provide that an entity is a principal transaction and must be reported as gross as long as the reporting party is the principal obligor (Miller, 2013). This means that it is liable to the customer in the event of an accident covered by the insurance policy granted to the consumer. However, Crazy Computers Retailers does not offer a primary obligation and therefore should not recognize the initial fee collected from premium policies as gross revenue. The third-party insurer is responsible for settling the claim and therefore should be responsible for recognizing the income as revenue. The same scenario applies to the case of reinsurance. ASC 605 – 45 is categorically clear that it does not cover transactions that include premiums for insurance and reinsurance (Miller, 2013). This means that Crazy Computers Retailers' claim to recognize commissions generated from the sale of extended warranty contracts is incorrect. Since this provision does not cover insurance concepts, it would therefore be incorrect to use it. The reason given for not covering these revenues is that they are covered by a different codification. In this case, the insurance is covered by Financial Services – Insurance (944-605) (FASB. 2011). Under this provision, Crazy Computers Retailers is entitled to recognize any amount generated by the sale of an insurance policy to the extent the insured is obligated to pay the insurer as prescribed in Financial Services - Insurance (944-685) Sec 25-2(a) (FASB. 2011). Similar...... half the card...... counts for $14/cwt. This amount is able to cover the losses incurred by selling the pigs for $29 and therefore Three Little Pigs, Inc. would not have to recognize impairment losses in its inventory in the transition period as required by ASC 270-10-45-6. Works Codification of accounting standards cited FASB. (2011). 944 Financial services – Insurance. Retrieved May 27, 2014, from https://law.resource.org/pub/us/code/bean/fasb.html/fasb.944.2011.htmlFinancial Accounting Foundation. (2009). FASB Accounting Standards Codification: Notice to Members (v 1.05). Retrieved May 27, 2014, from http://asc.fasb.org/.../5724610.pd...Miller, K. (2013). ASC 605-45 Sec: Determine whether a revenue transaction falls within the scope of ASC 605-45. The GAAP post. Retrieved May 27, 2014, from https://thegaappost.com/sec/605-revenue/605-45-principal-agent-considerations/605-45-scope.html