VIP Class Notes (Jacob) [W]

Vocabulary

Eel – a fish similar looking to a snake

Authoritarian – a government that controls everywhere instead of the people controlling the government
Totalitarian 

Corporal punishment – punishment that is only issued in the military (previously) includes things like whipping or caning

backlash – something that hurts yourself when trying to do something to others
eg. The social score system in China will have backlash if the economy goes go/tanks

Tank – to go down really fast
eg. I hope the economy doesn’t tank in the next few years while I’m working here.

Original

Following the meeting we had with the client yesterday, I would ask for your explanations about the registered addresses of both companies and other address where the companies carry out their businesses. In particular, we understood that one of the companies is registered to a Virtual Office and it benefits from Government Subsidies or Tax rebate. Could you please help me to clarify that?

Thanks for your kind cooperation but we need all the bank slips related to the transactions stated in the 2016 and 2017 bank statements. I have attached a sample of the documents we need for your reference.
We also would like to know what is the amount of the paid-in capital of Asia Limited.
I did not get in contact with the company secretary, please let me know how you prefer to proceed in order to collect these documents.

I have reviewed the Report and I would ash you for some explanations.
1. Par. III, page 5, “Therefore, the commission income and service revenue from related parties shall be recognized when the provision of the service is completed and the evidence for demanding the sales payment is obtained”. I would separate the explanation of the recognition method of commission and service revenue of after-sales service. The commission will be recognized adopting the POC, after-sales service revenue will be recognized when the provision of the service is completed. Could you confirm it?
2. Par. III, page 5, “In this case, when GBJ is informed by the related parties to issue the invoice according to the terms of invoicing and payment indicated in the sales agreement which the commission income is based on, commission or service revenue shall be recognized”.
As far as I know, there are some “sale agreements” signed between IMS/GSW and the ultimate clients, and there is the “commission agreement” signed between GBJ and IMS/GSW. The commission agreement should indicate that the commission shall be paid to GBJ according to predetermined percentages. In the report you have mentioned the followings: (1) 10%, when the sales agreement is signed; (2) 80%, when the machine is delivered; (3) 5% after the ultimate client issues the “acceptance certificate” of the machine; (4) 5% when the warranty period is expired. Could you confirm it?
If yes, the aforementioned percentage is not the POC. The POC is the revenue recognition method used by IMS/GWS and I think it should not expressly stated in any agreements. I call the above percentages “commission terms of invoicing and payment”.
Are the above “commission terms of invoicing and payment” used in each commission agreement?
3. Par III, pag 5-6, what kind of invoices are shown in the table? Sales of spare parts or after-sales services?
4. Par. III.ii, pag. 7. Let have a look to the Job GC17I0067, GBJ recognized the revenue, according to the percentage (20%) stated in the terms of invoicing and payments of the “commissions agreement” between GBJ and GSW (Can you confirm?), when it issued the invoice and received the relevant payment. But, on 31/05/2018, the percentage of completion “POC” is 74%, so IMS wants that GBJ recognizes the revenue according to this percentage. Therefore, GBJ has to recognize the difference between 74% and 20% as an Accrued Revenue, not a Deferred Revenue. It is an asset not a liability. Can you confirm it? Has GBJ issued an invoice for the payment received equal to 20% of the whole amount of the commission? Based on your experience, should GBJ issue an invoice at the end of the month in order to recognize the revenue (74% – 20% = 54%) according to the POC?

There has been a misunderstanding with Mr Prederi. In fact, he thought that the report we are going to provide him would be for the month of May. Not April.
Therefore, according to the schedule I sent you last week, the deadline for the report for the month of June is July 9th, July report will be August, and so on. I know it will be difficult to collect the information and documents from GBJ of a month within the first week of the next month. Do you think it is feasible? Could you check with Jesse about that?
Having said that, the client is expecting to receive the report for the month of April by today so that he can review it in the next two days and tell us the adjustments he deems necessary.
I have attached the report, please find my amendments and comments. Could you send me back the report with your explanations and suggestions as soon as possible in order to allow Eugenio and I to do a final review?
I want to send the report to the client by today.
Moreover, Mr Prederi has asked us to provide him with the reports for the months of May and June by July 9th. Could you arrange a visit to the GBJ’s premises as soon as possible in order to meet that deadline?

Edited

Following the meeting we had with the client yesterday, I would ask for your explanations about the registered addresses of both companies and other addresses where the companies carry out their businesses. In particular, we understood that one of the companies is registered to a Virtual Office and it benefits from Government Subsidies or Tax rebates. Could you please help me to clarify that?

Thanks for your kind cooperation but we need all the bank slips related to the transactions stated in the 2016 and 2017 bank statements. I have attached a sample of the documents we need for your reference.
We also would like to know what is the amount of the paid-in capital of Asia Limited.
I did not get in contact with the company secretary, please let me know how you prefer to proceed in order to collect these documents.

I have reviewed the Report and I would like to ask you for some explanations.
1. Par. III, page 5, “Therefore, the commission income and service revenue from related parties shall be recognized when the provision of the service is completed and the evidence for demanding the sales payment is obtained”. I would separate the explanation of the recognition method of commission and service revenue of aftersales service. The commission will be recognized adopting the POC, aftersales service revenue will be recognized when the provision of the service is completed. Could you confirm it?
2. Par. III, page 5, “In this case, when GBJ is informed by the related parties to issue the invoice according to the terms of invoicing and payment indicated in the sales agreement which the commission income is based on, commission or service revenue shall be recognized”.
As far as I know, there are some “sale agreements” signed between IMS/GSW and the ultimate clients, and there is the “commission agreement” signed between GBJ and IMS/GSW. The commission agreement should indicate that the commission shall be paid to GBJ according to predetermined percentages. In the report you have mentioned the followings: (1) 10%, when the sales agreement is signed; (2) 80%, when the machine is delivered; (3) 5% after the ultimate client issues the “acceptance certificate” of the machine; (4) 5% when the warranty period is expired. Could you confirm it?
If yes, the aforementioned percentage is not the POC. The POC is the revenue recognition method used by IMS/GWS and I think it should not be expressly stated in any agreements. I call the above percentages “commission terms of invoicing and payment”.
Are the above “commission terms of invoicing and payment” used in each commission agreement?
3. Par III, pag 5-6, what kind of invoices are shown in the table? Sales of spare parts or after-sales services?
4. Par. III.ii, pag. 7. Let Please have a look to at the Job GC17I0067, GBJ recognized the revenue, according to the percentage (20%) stated in the terms of invoicing and payments of the “commissions agreement” between GBJ and GSW (Can you confirm?), when it they issued the invoice and received the relevant payment. But, on 31/05/2018, the percentage of completion “POC” is 74%, so IMS wants that GBJ recognizes the revenue according to this percentage. Therefore, GBJ has to recognize the difference between 74% and 20% as an Accrued Revenue, not a Deferred Revenue. It is an asset not a liability. Can you confirm it? Has GBJ issued an invoice for the payment received equal to 20% of the whole amount of the commission? Based on your experience, should GBJ issue an invoice at the end of the month in order to recognize the revenue (74% – 20% = 54%) according to the POC?

There has been a misunderstanding with Mr Prederi. In fact, he thought that the report we are going to provide him would be for the month of May. Not April.
Therefore, according to the schedule I sent you last week, the deadline for the report for the month of June is July 9th, the July report will be in August, and so on. I know it will be difficult to collect the information and documents from GBJ for a previous month within the first week of the next month. Do you think it is feasible? Could you check with Jesse about that?
Having said that, the client is expecting to receive the report for the month of April by today so that he can review it in the next two days and tell us the adjustments he deems necessary.
I have attached the report, please find my amendments and comments. Could you send me back the report with your explanations and suggestions as soon as possible in order to allow Eugenio and I to do a final review?
I want to send the report to the client by end of day today.
Moreover, Mr Prederi has asked us to provide him with the reports for the months of May and June by July 9th. Could you arrange a visit to the GBJ’s premises as soon as possible in order to meet that deadline?