Hi,
I am not an accountant but a programmer, I am in a situation where I am was wondering if the following situation would be covered by GAAP:
We have invoices being exchanged electronically between trading partners with a particular calculation model, let us say
price of item * amount of item purchased = cost of purchase line
but someone else wants to do
price of item * (amount of item purchased / cost of unit) = cost of purchase line.
The person who wants to do this change wants to allow people to choose which method they use to calculate out their invoices without specifying which it is.
The suggested solution is when receiving an invoice, calculate using method 1, if method returns correct amount process else calculate using method 2.
The obvious problem here is that (theoretically) someone could have calculated incorrectly with method 1 and return an amount incorrect by method 1 but an amount correct by method
- Or that someone could calculate using a third method and have a higher chance of returning a correct result by one of the approved methods.
This seems to me to be too low level and atomic a process to be covered by GAAP rules but I could be wrong. Are there any generally accepted accounting principles about this kind of thing that says don't allow vagueness as to how an individual amount was arrived at into global amounts?