...Products Corporation (CCPC) is a public company with a calendar yearend. 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 developed 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 1, 2009. The coupons expire on October 1, 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 had a 1.5 percent redemption rate. CCPC estimates that approximately 2 percent of the detergent coupons will be redeemed by customers prior to the expiration date. However, CCPC does not have any data...
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...Statement of Financial Accounting Concepts No. 5, Recognition and Measurement in Financial Statements of Business Enterprises, to routine transactions and topics, such as long-term construction contracts and installment sales (FASB 1984). While these topics are important, there are literally hundreds of revenue-generating transactions that are not covered in the traditional financial accounting sequence. These are their stories (for any Law and Order fans): Case One: Facts Consumer Cleaning Products Corporation (CCPC) is a public company with a calendar yearend. 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 developed 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...
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...Cleaning Products Corporation (CCPC) had recognized revenue for over $2,000,000 by December 31, 2009. CCPC began releasing coupons concurrently with the detergent’s launch date of December 1, 2009; therefore, requirement (a) is the later of the two dates. All of the estimated coupon redemption of $20,000 should be expensed on December 31, 2009 which would fall within CCPC’s 2009 Income Statement. 2) According to ASC 605-50-25-4, “A vendor shall recognize a liability… based on the estimated amount of refunds or rebates that will be claimed by customers. However, if the amount of future rebates or refunds cannot be reasonably and reliably estimated, a liability (or deferred revenue) shall be recognized for the maximum potential amount of the refund or rebate.” The codification then states factors that make estimates unreliable including: “a. Relatively long periods in which a particular rebate or refund may be claimed b. The absence of historical experience with similar types of sales incentive programs with similar products or the inability to apply such experience because of changing circumstances c. The absence of a large volume of relatively homogeneous transactions.” The fact that CCPC’s sales incentive is for a relatively long period of time (part a) and that CCPC has not had a large volume of similar transactions (part c) it seems as though CCPC cannot reasonably and reliably estimate coupon redemption. In this scenario CCPC would have to create a...
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...services and customer feedback and health and safety. This Assignment is worth 20 % of my overall mark for the module retail selling and it is a mandatory module for a certificate in Beauty Sales. I will use primary and secondary research for this assignment. Methodology I have gathered the research for this assignment from a variety of sources. These sources include the internet, books and class notes. I collected my research at various stages of the project process before I assembled it. Legislation that affects retailers Consumer protection Act 2007 The Consumer protection Act was set up on the 1st of May 2007. It then established the national consumer agency. Competition and Consumer Protection Commission. * CCPC took over from the NCA * The CCPC are responsible for promoting consumer welfare, investigating, enforcing...
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...Members as Shareholders 3. Corporate Attribution Rules - Chapter 13 (13390); S. 74.4 - see problems contained in these notes Recommended Questions: Chapter 13, Multiple Choice Questions 6 and 7 and Exercises 8 and 10 “$800,000” Lifetime Capital Gains Exemption (C.G.E.) The March 21, 2013 federal budget has increased the C.G.E. to $800,000 starting in 2014. This amount, i.e., $800,000, will be indexed to inflation, i.e., it will be further increased, in 2015 and thereafter based on the rate of inflation. In 2015 the C.G.E. is $813,600. The availability of the QSBC capital gains exemption is an advantage of incorporating a small business (a CCPC earning active business income in Canada). This same exemption, with a higher $1M exemption for dispositions on or after April 21, 2015, is also available for capital gains on certain farming and fishing assets. This course will not focus on family farms or fishing properties. Note that an $800,000 capital gains exemption is really a $400,000 taxable capital gains deduction because only ½ of a capital gain is included in income. Each individual has a lifetime total $813,600 (in 2015) capital gains exemption (C.G.E.). Any previously utilized C.G.E.’s will reduce the balance remaining. The actual amount in a given year that an individual can claim as a C.G.E. is a “least of” formula. This “least...
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...Intermediate Accounting A Series of Revenue Recognition Research Cases Using the Codification Case One: Consumer Cleaning Products Corporation (CCPC) Case Two: Landline Corporation Case Three: Assembly Lines Incorporated (ALI) Submitted By Chen Chongxiao Sweta Shah Xiaoyun zhang Case One Requirement 1: The accounting issue in this case is how to account for the coupons which was introduced on Sep. 1 2009 for the new detergent Fresh & Bright Marketing campaign by a detergent manufacturer called Consumer Cleaning Products Corporation (CCPC). The coupon drops served as a sales incentive, which can be further explained by FASB Codification Section 605-50, “Customer Payments and Incentives,” in this case. Requirement 2: According to FASB Codification 605-50-25-3, for a sales incentive offered voluntarily by a vendor and without charge to customers that can be used or that becomes exercisable by a customer as a result of a single exchange transaction, and that will not result in a loss on the sale of a product or service, a vendor shall recognize the cost of such a sales incentive at the later of the following: a. The date at which the related revenue is recognized by the vendor b. The date at which the sales incentive is offered (which would be the case when the...
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...Using the Codification Case One: Consumer Cleaning Products Corporation (CCPC) Case Two: Landline Corporation Case Three: Assembly Lines Incorporated (ALI) Submitted By Chen Chongxiao Sweta Shah Xiaoyun zhang Case One Requirement 1: The accounting issue in this case is how to account for the coupons which was introduced on Sep. 1 2009 for the new detergent Fresh & Bright Marketing campaign by a detergent manufacturer called Consumer Cleaning Products Corporation (CCPC). The coupon drops served as a sales incentive, which can be further explained by FASB Codification Section 605-50, “Customer Payments and Incentives,” in this case. Requirement 2: According to FASB Codification 605-50-25-3, for a sales incentive offered voluntarily by a vendor and without charge to customers that can be used or that becomes exercisable by a customer as a result of a single exchange transaction, and that will not result in a loss on the sale of a product or service, a vendor shall recognize the cost of such a sales incentive at the later of the following: a. The date at which the related revenue is recognized by the vendor b. The date at which the sales incentive is offered (which would be the case when the sales incentive offer is made after the vendor has recognized revenue; for example, when a manufacturer issues coupons offering discounts on a product that it already has sold to retailers). In this case, CCPC has sold and recognized revenue for over $2millions of Fresh & Bright...
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...Class 1 4% | Most buildings/other structures, electrical wiring, plumbing, heating, AC (after 1987). Separate class for rental buildings>$50k | Class 1-MB 10% | New manufacturing buildings (MB) used at least 90% for manufacturing and processing purposes (acquired on or after Mar 19, 2007). NOTE Class 1 has ½ year rule!!! | 1-NRB | New non-residential buildings (NRB) (on/after Mar 19, 2007) 6% | 8 20% | Misc. tangible capital property. Furniture, fixtures, outdoor advertising signs, equipment (photocopiers, fridge, telephone, tools costing $500+, not included in another class) | 10 | Automotive equip. Cars, van, truck, tractor, wagon, trailer 30% | 10.1 30% | Passenger vehicle with cost in excess of prescribed limit ($30k if acquired after 2000). Separate class. Deemed cost 30k, add HST | 12 100% | Tools, instruments, kitchen utensils < $500. Linen, uniforms, dies, moulds, rental video cassettes, computer software. | 13 | Leasehold interest | 14 | Patent, franchise, concession, licence for limited period.no prorate | 17 8% | Roads, parking lots, sidewalks, airplane runways, storage areas, similar surface construction | 29 50%Or 30 | Machinery and equipment used in manufacturing or processing (acquired after Mar 18, 2007 and before 2016). CCA is 50%, straight-line basis, half-year rule applies. After 2016: class 43, with 30% declining balance rate | 43 30% | Manufacturing and processing machinery and equipment acquired after 2016 | 44 25% | Patents...
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...1 -- Requirements. CCPC is considering how it should account for the Fresh & Bright coupon drop that took place on October 1, 2009. In doing so, CCPC asks for your help. Prepare a memo addressing the following questions. Base your analysis of the following questions on the relevant authoritative literature and discuss the support in that literature for your conclusions. Be sure to cite the relevant components of the Codification in your discussion. Citations are not required for journal entries. 1.What are the accounting issue(s) and the relevant components of the authoritative literature? 2.When should CCPC recognize the effects of the Fresh & Bright coupon drop in its financial statements? 605-50-25-3 25-3 For a sales incentive offered voluntarily by a vendor and without charge to customers that can be used or that becomes exercisable by a customer as a result of a single exchange transaction, and that will not result in a loss on the sale of a product or service, a vendor shall recognize the cost of such a sales incentive at the later of the following: a. The date at which the related revenue is recognized by the vendor b. The date at which the sales incentive is offered (which would be the case when the sales incentive offer is made after the vendor has recognized revenue; for example, when a manufacturer issues coupons offering discounts on a product that it already has sold to retailers). From FASB principle, CCPC should recognize the...
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...ISSUES IN ACCOUNTING EDUCATION Vol. 26, No. 3 2011 pp. 609–618 American Accounting Association DOI: 10.2308/iace-50029 A Series of Revenue Recognition Research Cases Using the Codification R. Mark Alford, Teresa M. DiMattia, Nancy T. Hill, and Kevin T. Stevens ABSTRACT: This series of four short cases is designed to help students develop the skills to research the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification and other authoritative literature. It also is designed to help improve students’ ability to analyze and critique the complex issues that often surround the accounting for revenue recognition. The case scenarios describe transactions in which students must decide whether, when, and how much revenue to recognize. The issues analyzed involve bill-and-hold, multiple-element arrangements, gross versus net revenue reporting, and sales incentives. The cases are also designed to improve teamwork and communication skills. The sequence of cases is intended for use in an intermediate accounting class that covers revenue recognition, or in a capstone class that emphasizes critical thinking and research skills. Keywords: revenue; recognition; codification; research. INTRODUCTION evenue recognition is one of the top causes for financial statement restatements (Whitehouse 2010). In addition, revenue recognition is an area commonly questioned by the Securities and Exchange Commission (SEC) staff in their review of public filings and resultant comment...
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...Chapter 9 Individual: OC/OI Other sources of income 3(a) in Div. B: * CPP pension benefit: can elect to do income splitting – 50% of the combined CPP benefit received. Contributor must be >60 years old * Pension income: 50 of combined pension income. >65: eligible pension income includes annuity payments under RPP.RRSP,DPSP. RRIF <65: RPP + death of spouse payment * Retiring allowance: pension income and death benefits. A. retirement from an office/employment in recognition of long service B. loss of office including court-awarded damages received by taxpayer * Annuity: full amount of annuity payments entitled from an investment of money – capital portion * Amount received from deferred income plans: 1. RESP: life-time contribution limit 50,000, over max. 31 years. Contribution not deductible/ is taxed, accumulated investment income is taxable to beneficiary (<21) as “Educational assistance payments:” a. CESG- Canada educations saving grant: 20% of $2500 of annual contributions to an RESP of children up to 18/ max. of $500 per year per child/ max. CESG per child is $7200/ additional CESG: net income of family <43561, 20% matching of first $500, if NI 43561-87123, 10% b. CLB- Canada learning bond: child bofrn after dec. 31 2004, first CLB of $500, $100 each year including year turning 15. Limit < $2000 per child, can be transferred to RESP before 18 c. Distribution: back to subscriber if hes alive and either beneficiary...
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...Concept: Assumptions: Accrual and going concern Characteristics: Relevance –If information is Influencing the decision and material. Faithful Representation- If the information is reliable i.e. Completeness, neutrality, Free from error. Enhancing characteristics: Comparability, verifiability, Timeliness, and Understandability Cash Flow: From operations, Investing, and financing Indirect method-Adjust from NI. Direct method- Collections from customers, Payment to supplier, operating expenses, income tax. | IFRS | ASPE | Dividend paid and revenue | Consistent | Financing | Interest expense and revenue | Consistent | Operating | Revenue Recognition: CIP to cash, AR to Billings, COGS to Revenue (Difference is CIP), Cash to AR, at end close Billing and CIP Gross profit= (Total expected revenue – Total expected cost) * % of completion Net profit = % of revenue – Actual cost Accounts Receivable: Bad debts Expenses to AFDA Write off= AFDA to AR and then recover = AR to AFDA Inventory: FIFO-Periodic and perpetual: End Inventory * rate purchased Weighted Average Periodic: Cost of goods available for sale / # of units available for sale Weighted Average Perpetual: constantly average out Assets: Asset Retirement Obligation (ARO): Asset to ARO (PV), Interest to ARO. Then depreciation. Depreciation: Except DBM - (Asset- RV)* method depreciate. DBM depreciate on original price till it reaches RV Capitalize borrowing cost: Specific borrowing first, then general...
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...Untitled Document 1 of 18 http://www.cga-education.org/2014-15/PAP/Refreshers/tx1.refresher.htm TX1 Refresher Welcome to the TX1 refresher. This presentation is intended to help you review taxation concepts as you prepare for the PA1 and PA2 exams. In addition to this refresher, a more detailed review of the Personal & Corporate Taxation course is provided in the TX1 lesson summaries. To brush up on the changes to the accounting treatment of tax issues, review IAS 12 under International Financial Reporting Standards (IFRS) as well as section 3465 of the Accounting Standards for Private Enterprises (ASPE). Purpose Knowledge Horizontal and vertical thinking Ethics Legal responsibilities Income Tax Act Steps in computing income tax Source concept Distinctions Employment income versus business income Business income versus capital gain Business income versus property income Business income versus hobby Employment or office income Accounting income versus income for tax purposes Depreciation versus CCA and CECA Taxable versus non-taxable Calculating business income deductions Income from property Dividends 11/23/2014 12:12 PM Untitled Document 2 of 18 http://www.cga-education.org/2014-15/PAP/Refreshers/tx1.refresher.htm Tax integration — Corporation Tax integration — Shareholder Capital cost allowance Cumulative eligible capital amount Relationships Related Associated Connected Capital gains and losses Taxable income Tax...
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...TX1 Basic Concept Tax policy Branch o the department of finance: responsible for the development and evaluation of federal taxation policies and legislation. Canada Revenue Agency: actual collection of taxes and interpretation of tax law Tax payable by persons resident in Canada: An income tax shall be paid … on the taxable income for each taxation year of every person resident in Canada at any time in the year. Persons: including corporations and anybody representing such persons. (Individuals, corporations, and trusts that represent individuals or corporations.) Full time resident: are subject to tax on their worldwide income throughout the entire calendar year. All domestic and foreign sources of income, including capital gains, must be included in the computation of net income. Non-resident person: may be subject to tax only if he was employed in Canada, carried on a business in Canada or disposed of a taxable Canadian property. The tax liability for the non-resident person would be calculated on the income from these items only, not on world income. Deemed resident: ▪ Sojourning in Canada for 183 days or more in a year ▪ Being a member of Canadian forces ▪ Performing services outside Canada under an international assistance program of the Canadian International Development Agency, if the individual was resident in Canada at any time during the three months prior to the day the services commenced; and ▪ Being an officer...
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...per year for the next seven years due to increased efficiency resulting from using this machine. In addition, the machine is capable of producing a new product. Retil Ltd. estimates the operating income from this new product will be $11,000 per year for the next seven years. At the end of seven years, Retil Ltd. estimates the machine can be sold for $50,000. However, the machine will require major maintenance at the end of four years, which is estimated to cost $12,600. The machine has a useful life of 12 years and Retil Ltd. intends on depreciating the machine using the straight-line method. The machine is eligible for a CCA tax deduction at 30%. Retil Ltd.’s minimum desired after tax rate of return is 14%. Since Retil Ltd. is not a CCPC, Retil Ltd. is subject to a 40% tax rate. Required: 1. Should Retil Ltd. purchase the machine? Present value of cash flows A B A x B Description Year Pre-tax Amount Post-Tax Amount Pos- Tax Discount Rate Present Value Factor Present Value Outflow or Inflow [pic] Non-recurring Cash Flows: Tax Shield: Cdt x (1 + 0.5k) - Sn x dt d + k (1 + k) (1 + k)n d + k = (350,000 x .3 x .4) x (1 + (.5 x .14)) - 50,000 x (.3 x .4) (.3 + .14) ...
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