This is the question and my answer that I gave. It was turned back to me needing revision. An estimate of 2015 royalties from a patent on a new, untested medical diagnostic device that Dr. Fiddle bought last year from a colleague who invented but sold it because she is about to retire in Bermuda. No.  Should not be on the financial statement. The 2015 royalties are an estimate.The accounting principal most applicable is: Business Entity Principle (Accounting Entity) It’s similar to an appraisal and it does not affect revenue for 2013-2014. Non-Monitory Principle. It’s an estimate, there is no cash transaction for 2013-2014.I was told that the Monitory Principle needed revision.

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