Hotye United Electronic Services

The entrepreneurs of the Regical Electronics Company Limited, a financial software and integrated system developer in Guangzhou, have perceived a new e-business opportunity in the sale of an electronic payment system. To implement the Hotye business project, a new company is established, and the immediate task for the chief financial officer is to seek financing sources for the huge investment and to determine the appropriate accounting policies that will help the new company decide on its business and financial strategies. Two significant financial reporting issues are the depreciation of the Hotye electronic payment terminals and the method of revenue recognition, as various approaches of depreciation and revenue recognition can produce different impacts on taxation and on the bottom line.