Ch 13 Exercises

Question 1

Imagine you are presenting an accounting issue to a class of your peers. The issue is when a company should recognize revenue for the sale of a computer with a 2-year warranty. Prepare a draft agenda (using bullet points) for this hypothetical presentation.

Answer 1

-Criteria for revenue recognition for U.S. GAAP
-Five-Step Model for recognition revenue - ASC 606
-Warranty Obligations in ASC 606
-Distinguishing Between Assurance- And Service-Type Warranties
-Determining if the warranty qualifies as an additional service
-Accounting Implications for Assurance and Service-Type warranties

Question 2

Now imagine that you are presenting the same issue to students in an MBA program, who do not have a deep accounting background. Name three ways in which the focus, delivery, or content of your presentation might change in light of this audience.

Answer 2

1) Focus: explaining what it means to recognize revenue and why having standards behind the process are important.

2) Content: be less specific and use far less jargon

3) Delivery: talk slowly and keep everyone’s attention engaged.