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.
