...Circuit City Case Sample 1 1) Which of the three approaches to accounting for extended warranty and service contracts is most consistent with the actual substance of a sales transaction involving equipment and an extended warranty contract? Explain your selection and your reasoning fully. In our opinion, Partial Revenue Recognition approach is most consistent with the actual substance of a sales transaction involving an extended warranty contract. Using partial revenue recognition, the company can recognize partial revenue at the time of sale. We can distinguish between what is earned and what is yet to be earned. At the time of sale, the company recognized a portion of the revenue that they earned on the total sales because the warranty contract is incomplete. It recognizes the rest portion of the sale as deferred revenue and records “over the contract period” (Bruns 3). This method let the sales revenue and liabilities account to average out, which is relatively relevance and faithful representing the financial information. * Full Revenue Recognition approach had low faithful representation. Since the revenue associated with the service of the contract has not yet been completed, which means the revenue had not been earned; therefore, it was less precise to recognize it at the sale. It will understate the liability and overstates sales revenue because this method realizesfull revenue at the point of sale and adjusts later if “actual costs under the service contract fell...
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...and an extended warranty contract. Revenue from warranty has to be recognized when a period of a warranty is fulfilled. It would be wrong to consider revenue from the sale of an extended warranty or product maintenance contract at the time of sale since the company is still liable or obliged to the customers with the warranty. All are major elements of Partial Revenue Recognition on the sale of extended warranty and product maintenance contracts were applied in the Circuit City case since it was mentioned in the text that the sales has rapidly grew from $705 million in 1986 to $2.1 billion in 1990. This is when the company had introduced the extended warranty contracts and the profit margin form the extended warranty sales were high in comparison to the profit margin from the sale of products. The warranty contract relates to the product sold by Circuit City where the pricing of the sale of the extended warranty is an integral part of pricing the related product The third approach is most consistent with the actual substance of sales transactions involving equipment and an extended warranty contract. Revenue from warranty has to be recognized when a period of a warranty is fulfilled. It would be wrong to consider revenue from the sale of an extended warranty or product maintenance contract at the time of sale since the company is still liable or obliged to the customers with the warranty. All are major elements of Partial Revenue Recognition on the sale of extended warranty and product...
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...Circuit City (Extended Warranty) Case I feel of the three approaches to accounting for the extended warranty, approach Deferral of Revenue is best. My reasoning for this is because it allows you to view and potentially process the total transaction into two separate transactions making it easier to track and account for. This approach also gives you the potential to resell the warranty contracts to a third party provider if you find that the program is not profitable or does not conform to the way you want to handle operations of the extended warranty. I would account for and process each sale as one, the product being a separate transaction and two, sale of the extended warranty as another transaction. Any given sale could differ from another given sale in that maybe “customer A” buys a product and an extended warranty and “customer B” only buys the product. How do you account for different transactions of the same product? I propose you do this by viewing and accounting them as two separate and individual transactions. As the case states the revenue is not fully complete because services rendered have not been earned until the extended warranty period is complete. You can still earn interest on the money by putting it into a separate account maybe something like an escrow account and tracking it that way until the contract is complete and you can enter the remaining portion as net profit. By accepting this approach of accounting you can also adjust any numbers...
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...PERSON: Mike Chalifoux, SVP and CFO ISSUE: Circuit City’s Accounting Practices, specifically, revenue recognition of warranty and extended services WHY NOW: Proposed FASB rule change DETAILS: The Financial Accounting Standards Board (FASB) is proposing that Circuit City use the Deferral of Revenue method of accounting for their extended warranty contracts. Circuit City argues that this would result in a mismatch in Revenue. This issue is important to Circuit City Stores because the accounting practices that they employ to recognize revenue will significantly alter their reported income. The contracts have much greater relative profit margins in comparison to the actual retail items. If you compare Circuit City’s Net Sales and Operating Revenues in 1990 - 2,096,588 – and Net Earnings – 78,100 – which includes Warranty Sales, Circuit City would have to report a Net Loss if they couldn’t count the revenue made from Warranty Sales - 112,933,000. Recognizing the $100 profit on the sale of the stereo would increase their income statement, rather than deferring and recognizing it as revenue over the two-year contract period. This will have an overall negative impact on shareholder’s equity. DISCUSSION: Approach 1 – Full revenue recognition PRO | CON | * High revenue | * Least conservative * Highest risks * Doesn’t reflect the matching principle * Overstates the revenue | Approach 2 – Deferral of revenue PRO |...
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...Best Buy Co., Inc. Sustainable Customer Centricity Model Case Study Analysis Amber Keita ADMIN404 November 16, 2013 Table of Contents Executive Summary 3 Introduction and Company Overview 4 Mandate 4 Core Purpose 4 Vision & Major Goals 5 Core Values & Guiding Principles 5 Stakeholder Analysis 6 External Analysis 7 Opportunities 7 Economies of Scale 7 Complementors 7 Global Expansion 8 Threats 8 The Internet 8 Big Competition 9 Government Regulation 9 Internal Analysis 10 Strengths 10 No Commission Sales 10 Customer Centricity Model 10 Broad Market Coverage 11 Multiple Product Lines 11 Weaknesses 12 High Debt – Low Cash 12 Pricing Pressures 12 Legal Issues 13 Short Product Life Cycles 13 References 14 Exhibits 15 Executive Summary Best Buy Co., Inc. is a leading retailer of consumer electronics in the U.S. and Canada with nearly 4,000 stores worldwide. Among the extensive range of products marketed, are mobile phones, televisions, gaming systems, appliances and computers, along with all of their components and accessories. The company pursues a differentiation strategy based on excellent customer service, no commission, highly informed sales staff, and a plethora of end-to-end services. Best Buy was started in 1966, and has acquired seven companies in the path of its growth, all of which either provide a complementary service and/or additional products for its customers. The external analysis identifies...
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...12 BEST BUY CO. INC.: SUSTAINABLE CUSTOMER CENTRICITY MODEL? 12 BEST BUY CO. INC.: SUSTAINABLE CUSTOMER CENTRICITY MODEL? CASE # 3 Best Buy Co. Inc.: Sustainable Customer Centricity Model? MGT403 Strategic Management Prepared for Tanvir H DeWan Coordinator of College of Business IUBAT Prepared by Serial Number | Name | ID | 01 | Shahriar Rawshon (Group Leader) | 09102095 | 02 | Md. Zakiruzzaman | 09102151 | 03 | Suchona Akter Swarna | 09102163 | 04 | Shahara Akter Eva | 09102156 | 05 | Kanij Fatama | 09102165 | 06 | Ruksana Aktar | 09102130 | 07 | Md. Al Amin | 09302012 | Section: B International University of Business Agriculture and Technology Date of Submission: 29th May, 2012 Current Situation: Best Buy was a specialty retailer of consumer electronics. It operated over 1,100 stores in the United States, accounting for 19% of the market. With approximately 155,000 employees, it also operated over 2,800 stores in Canada, Mexico, China, and Turkey. The company’s subsidiaries included Geek Squad, Magnolia Audio Video, and Pacific Sales. In Canada, Best Buy operated under both the Best Buy and Future Shop labels. From a strategic standpoint, Best Buy moved from being a discount retailer (a low price strategy) to a service-oriented firm that relied on a differentiation strategy. In 1989, Best Buy changed the compensation structure for sales associates from commission-based to non- commissioned-based, which resulted in consumers...
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...Financial Reporting and Analysis ChapterÊ12ÊSolutions Income Tax Reporting Exercises Exercises 1. Determining current taxes payable (AICPA adapted) The amount of current income tax liability that would be reported on Ross Co.’s December 31, 1998, balance sheet is determined as follows: Net income before depreciation expense and income taxes $100,000 Depreciation expense (for tax purposes) (20,000) Taxable income 80,000 Tax rate 30% Current income tax liability $24,000 2. Determining deferred tax liability (AICPA adapted) To determine the deferred income tax liability reported on the December 31, 1999, balance sheet requires a calculation of the cumulative temporary (timing) differences that give rise to future taxable amounts as of that date. Gross margin temporary differences are as follows: (Book purposes) (Tax purposes) Temporary Differences Year Accrual Method Installment Method (Future Taxable Amount) 1998 $800,000 $300,000 $500,000 1999 1,300,000 700,000 600,000 Total temporary differences as of 12/31/99 $1,100,000 Tax rate in effect when differences will reverse 25% Deferred tax liability on 12/31/99 $275,000 3. Determining deferred tax liability (AICPA adapted) Tow’s deferred tax liability for December 31, 1998, is computed as follows: | |Reversal of | ...
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...Model: GH-PAC-12E1 Model: GH-PAC-12E1HP WITH HEAT 12,000 BTU Portable Air Conditioner Operating Instructions Thank you for choosing a Soleus Air Powered by Gree Portable Air Conditioner. This owner’s manual will provide you with valuable information necessary for the proper care and maintenance of your new product. Please take a few moments to thoroughly read the instructions and familiarize yourself with all the operational aspects of your new Portable Air Conditioner. For your own records, please attach a copy of your sales receipt to this manual. Also, write the store name/location, date purchased, and serial number below: Store Name: ____________________________________________________ Location: ______________________________________________________ Date Purchased: _________________________________________________ Serial Number (located on back of unit): ______________________________ IMPORTANT INSTRUCTIONS Before installing and using your portable air conditioner, please read this owner’s manual carefully. Store this manual in a safe place for future reference. 1) Always place the unit on a level surface. 2) Never use or store gasoline or other flammable vapor or liquid near this unit unless instructed by this manual. 3) Maintain at least 12 inches (50 cm) clearance space around this unit. Do not block or cover air inlet or outlet grilles. 4) The unit must be connected to a correctly grounded power supply. 5) Do not start or stop the unit by inserting or pulling...
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...CHAPTER 13 Current Liabilities and Contingencies ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Concept of liabilities; definition and classification of current liabilities. Accounts and notes payable; dividends payable. Short-term obligations expected to be refinanced. Deposits and advance payments. Compensated absences. Collections for third parties. Contingent liabilities (General). Guaranties and warranties. Premiums and awards offered to customers. Self-insurance, litigation, claims, and assessments, asset retirement obligations. Presentation and analysis. Questions 1, 2, 3, 4, 5, 6, 8 7, 11, 29 9, 10 12 13, 14, 15 16 17, 18, 19, 20, 22 21, 23 24, 25 26, 27, 28 1, 2, 3 4 5 8 6, 7 10, 11 13, 14 15 12 5, 6, 16 7, 8, 9, 16 13, 16 10, 11, 16 12, 15, 16 14 3, 4 10, 11, 13 5, 6, 7, 12, 15 8, 9, 12, 15 2, 10, 11, 13 9 14, 15 6, 7 5, 6, 7 7, 8 Brief Exercises Exercises 1, 16 Problems 1, 2 Concepts for Analysis 1 2. 3. 4. 5. 6. 7. 8. 9. 10. 2, 16 3, 4 1, 2 1, 2 3, 4 2 11. 29, 30, 31 9, 16 17, 18, 19 20, 21, 22 3 *12. Bonus payments. *This material is covered in an Appendix to the chapter. 13-1 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives 1. 2. 3. 4. 5. Describe the nature, type, and valuation of current liabilities. Explain the classification issues of short-term debt expected to be refinanced. Identify types of employee-related liabilities. Identify the criteria used to account for and disclose gain and...
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...Running header: E-WASTE IN INDONESIA 1 E-Waste in Indonesia: Implementing Clear Standards and Integrating the Informal Sector Donald P. Santoso ERM 428 Spring 2015 Arizona State University 2 E-WASTE IN INDONESIA Abstract While economic development gives rise to markets of emerging technologies, it also creates an emerging global issue in the management of the electronic waste (e-waste) it generates. Unfortunately Moore’s Law, which articulates that technological advancements follow an exponential upward growth every year, does not apply to the innovation in recycling that technology. E-waste is a term for waste electrical and electronic equipment (WEEE). These products and components can range from home appliances to consumer electronics; they are defined as e-waste once they reach the end of life, and no longer retain value through its intended function. The European Union (EU) estimates that the amount of global WEE increases 3-5% annually, equivalent to three times the growth of other categories of solid waste (Schwarzer, 2005). Electronic products have become extremely affordable in today’s economy, making it increasingly cheaper to replace these goods rather than fix them. Interval updates in the electronic sector also encourages pre-mature obsolescence of many products (Agamuthu et al., 2012). These factors contribute to a high turnover rate of electronics in the market. As a consequence, there is little incentive for both the industry and...
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...CHAPTER 13 Current Liabilities and Contingencies ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Concept of liabilities; definition and classification of current liabilities. Accounts and notes payable; dividends payable. Short-term obligations expected to be refinanced. Deposits and advance payments. Compensated absences. Collections for third parties. Contingent liabilities (General). Guaranties and warranties. Premiums and awards offered to customers. Self-insurance, litigation, claims, and assessments, asset retirement obligations. Presentation and analysis. Questions 1, 2, 3, 4, 6, 8 7, 11 9, 10 12, 5 13, 14, 15 16 17, 18, 19, 20, 22 21, 23 24, 25 26, 27, 28 1, 2, 3 4 5 8, 9 6, 7 10, 11 13, 14 15 12 5, 6, 16 7, 8, 9, 16 13, 16 10, 11, 16 12, 15, 16 14 3, 4 10, 11, 13 5, 6, 7, 12, 14 8, 9, 12, 14 2, 10, 11, 13 9 6, 7 5, 6, 7 7, 8 Brief Exercises Exercises 1, 16 Problems 1, 2 Concepts for Analysis 1 2. 3. 4. 5. 6. 7. 8. 9. 10. 2, 16 3, 4 1, 2 1, 2 3, 4 2 11. 29, 30, 31 17, 18, 19 3 Copyright © 2010 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 13/e, Solutions Manual (For Instructor Use Only) 13-1 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives 1. 2. 3. 4. 5. Describe the nature, type, and valuation of current liabilities. Explain the classification issues of short-term debt expected to be refinanced. Identify types of employee-related liabilities. Identify the criteria used to account for...
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...Student Cases with Solutions to accompany Accounting & Auditing Research: Tools & Strategies (7th edition) NOTE: In addition to the in-chapter and end-of-chapter exercises which serve as short cases you will find the following short cases arranged by course title that can also be utilized as short cases that require the student to access the authoritative literature to address the issue presented in the case. Other excellent sources of longer and more detailed cases include the Deloitte Trueblood cases (www.deloitte.com/more/DTF/cases_subj.htm), as well as the AICPA cases (www.aicpa.org). A topical listing of the cases is presented with the case and solution following the listing. Topical Index of Student Cases INTERMEDIATE ACCOUNTING Cases Case 1: Reporting acquisition and repayment transactions in the Statement of Cash Flows Case 2: Recording a forfeited payment Case 3: Revenue and expense recognition associated extended warranties Case 4: Accounting for “due on demand” note payable Case 5: Purchase of a controlling interest with a greenmail premium Case 6: Revenue recognition in the construction industry Case 7: Accrual and measurement of interest payments Case 8: Recognition of an asset transfer when title has not yet been received Case 9: Capitalization of interest and property taxes on a construction project Case 10: Deferred compensation and life insurance policy recognition Case 11: Reporting earnings per share balances...
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...5 Doctors RFP #108064 Network Implementation Attachment F - Specifications October 19, 2012 Prepared by: Jason Langley BriskIT 313-555-4410 www.briskit.com TABLE OF CONTENTS Page 1.0 GENERAL REQUIREMENTS FOR SYSTEM 4 1.1 General Information 4 1.2 Technical Requirements 4 1.3 Vendor Qualifications 5 1.4 Delivery 5 1.5 Contractor Responsibilities 5 1.6 Basic Execution Requirements for All Systems 6 1.7 Installation Requirements 6 1.8 County’s Responsibilities for Delivery and Installation 7 2.0 NETWORK ELECTRONICS 7 3.0 TELEPHONE SYSTEMS 7 3.1 General Telephone Requirements 7 3.2 System Functional Requirements 8 3.2.1 General 8 3.2.2 Miscellaneous 8 3.3 Requirements for Proposed Telephone System Additions 9 3.3.1 General Requirements for Systems 9 3.4 System Physical Requirements 9 3.4.1 Public Safety Building – 115 W. Doty 10 3.4.2 1 Fen Oak Resource Center – 1 Fen Oak Drive, Madison 10 3.4.3 Health and Human Services – 125 Veterans Road, Stoughton 11 3.4.4 Health and Human Services - 1460 W. Main Street, Sun Prairie 11 3.4.5 Job Center – 1819 Aberg Avenue 12 3.5 Proposal Response (place all costs/pricing in Cost Summary Sheet) 13 3.5.1 Base Proposal 13 3.5.2 Information on the Telephone/Voice System Products and Services Proposed 14 3.5.3 Voice Messaging System - NuPoint Messenger IP 14 3.5.4 NuPoint Messenger IP Upgrade...
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...Case Analysis for MGT 6520 Neeti Pradhan MBA 1st Semester Executive Summary XM Satellite Radio was founded in 1992 as a subsidiary of American Mobile Satellite Corporation. In 1997, the FCC granted satellite radio licenses to XM Satellite Radio and Sirius. Since now XM has a license they can launch their product but they are facing a lot of questions that are to be answered to have that perfect launch. At top of that, XM Satellite Radio has not proven it value to the market players yet. XM’s biggest rival, Sirius is already far ahead of XM Satellite in term of publicity, timing and fund raising. XM Satellite Radio has a big challenge of getting customers to pay for a service that has been and still is free. Furthermore, people are unaware about Satellite Radio in general and how is it different from AM/FM radio. Moreover, the radio industry is basically in the sales decline stage of the product lifecycle and on the other hand XM Satellite Radio is in the introduction stage of product life cycle. XM is looking for ways to introduce their product to the market but the radio industry is basically trying to stay alive. Now XM needs to decide what should be done so that their launch is perfect from the day one. They have many issues to be resolved like choosing the manufacturers, choosing the target market, setting the price, getting the best retailer, choosing the right promotional tools etc. XM has great opportunities to enter and exploit the market and change the...
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...“Marketing Activities of Batayan Housing & Development Ltd.” Submitted To: Mohammed Masum Iqbal Assistant Professor Department of Business Administration Daffodil International University Submitted By: Md. Roman Mia ID: 061-11-1157 BBA Program Major in Marketing Department of BusinessAdministration Daffodil International University. Date of Submission: 26-01-2013 January 26, 2013 Mohammed Masum Iqbal Assistant Professor Letter of Transmittal Department of Business Administration Daffodil International University Subject: Submission of Internship Report Titled “Marketing Activities of Batayan Housing & Development Ltd.” Dear Sir, I hereby with due respect would like to state that I have completed my Internship Program from Batayan Housing & Development ltd. I was appointed in Batayan Housing & Development ltd. Corporate Office addressed at 2/1, kalbagan (2nd floor), Dhanmondi, Dhaka-1205. The topic of my Internship report is “Marketing Activities Of Batayan Housing & Development Ltd.” Apart from the academic knowledge gained, this internship program and preparation of report has given me the opportunity to acquaint myself with a reputed company. I believe that the experience I acquired from this study will be an invaluable asset in my life. It has also to be mention that without your expert advice and cooperation it would not have been possible to complete this report. If you have any further enquiry concerning any additional...
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