Bill_and_hold

Bill and hold

Bill and hold

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A bill and hold transaction occurs when a company recognizes revenue before delivery takes place. Normally a revenue is not recognizable until goods are delivered or services are rendered.[1] Exceptions are made when a customer specifically requests that the vendor delay delivery and has a legitimate business reason for the request.[citation needed][2]

Alleged abuse by Nortel

Nortel Networks Corporation was a multinational telecommunications equipment manufacturer headquartered in Mississauga, Ontario, Canada. During and right after the optical boom years, Nortel allegedly used bill and hold transactions[3] to inflate the company's revenues during some quarters, allowing company executives to earn millions in bonuses.

References

  1. [1]
    "SEC Staff Accounting Bulletin No. 101".
  2. [2]
    "Google Answers: Accounting: Recognizing revenue".
  3. [3]
    "Ex-Nortel CEO John Roth says he's cleared - The Globe and Mail". The Globe and Mail. Archived from the original on 2012-11-07.


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