Lawrence Knight, CPA, Controller of Marvello Company, a Publicly Owned

Essay

Lawrence Knight, CPA, controller of Marvello Company, a publicly owned business enterprise, is a member of the Institute of Management Accountants. On June 30, 2006, the end of Marvello's fiscal year, Knight is instructed by his supervisor, Chief Financial Officer Ernest Coburn, to recognize as revenue a $100,000 shipment of merchandise to a customer, terms "on approval," on that date. Knight does not consider that the earnings process required for the recognition of revenue has been met for the shipment. As a member of the IMA, what should Lawrence Knight do? Explain.