Revenue recognition Assignment

business

Description

Below are the case fact5 and case requirements for four revenue recognition cases.

 

Case One: Facts

Consumer Cleaning Products Corporation (CCPC) is a public company with a calendar year­ end. CCPC manufactures detergent that is ultimately purchased (and used) by consumers. The supply chain consists of the following:

CCPC sells its detergent to a wholesaler;

The wholesaler sells the detergent  to a retailer; and

The retailer sells the detergent to a consumer.

CCPC launches a new detergent, Fresh & Bright, on September 1, 2009. In connection with this launch, CCPC c,ieveloped a comprehensive marketing campaign , Part of that campaign involves releasing ("dropping") approximately 500,000 coupons in Sunday newspapers in locales in which Fresh & Bright will be sold. When a consumer redeems the coupon upon purchasing a bottle of Fresh & Bright from a retailer, the price charged to the consumer is reduced by $2. The retailer at which the coupon is redeemed sends the coupon to a clearinghouse. CCPC reimburses the retailer for the discount provided to the customer.

CCPC discontinues the coupons for its new detergent on October l, 2009. The coupons expire on October l, 2010. CCPC has not offered coupons on detergent before, nor have they offered coupons with a one-year expiration period. They have, however, offered coupons with a six-month expiration date on other products. Those coupons bad a 1.5 percent redemption rate. CCPC estimates tha t approximately 2 percent of the detergent coupons will be redeemed by customers prior to the expiration date. However, CCPC does not have any data on the redemption rate for coupons offered on detergent. CCPC has sold (and recognized revenue for) over $2,000,000 of Fresh & Bright into the supply chain by Septemlber 30, 2009.

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