Discuss new accounting policy of revenue recognition

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Question - LaPort Ltd is a publicly listed manufacturing company in Australia. Recently, in response to the declining sales revenue, the company developed a new revenue recognition policy where 50 per cent of its inventory cost would be recognised as revenue at completion of production rather than at the point of sale. As a result, LaPort Ltd's revenue recognition for the current year has increased by 30% compared to that of last year where the company was under old accounting policy to recognise revenue at the point of sale of those inventories rather than at the completion of production.

Required - Discuss if LaPort Ltd's new accounting policy of revenue recognition is appropriate.

Reference no: EM132563767

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