BEAV » Topics » Revenue Recognition

This excerpt taken from the BEAV 10-K filed Feb 16, 2007.
Revenue Recognition Sales of products are recorded when the earnings process is complete.  This generally occurs when the products are shipped to the customer in accordance with the contract or purchase order, risk of loss and title has passed to the customer, collectibility is reasonably assured and pricing is fixed and determinable.  In instances where title does not pass to the customer upon shipment, the Company recognizes revenue upon delivery or customer acceptance, depending on the terms of the sales contract.

Service revenues primarily consist of engineering activities and are recorded when services are performed.

Revenues and costs under certain long-term contracts are recognized using contract accounting under the percentage-of-completion method, generally using the cost-to-cost method.  The percentage-of-completion method requires the use of estimates of costs to complete long-term contracts.  The estimation of these costs requires judgment on the part of management due to the duration of these contracts as well as the technical nature of the products involved.  Adjustments to these estimated costs are made on a consistent basis.  Revenues associated with any contractual claims are recognized when it is probable that the claim will result in additional contract revenue and the amount can be reasonably estimated.  A provision for contract losses are recorded when such facts are determinable.

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