To:
Date: December 2

At the meeting last week, J&J was considering how it should account for the Shiny Teeth coupon drop that took place on October 1, 2012. As discussed of your concerns, we conducted our audit in accordance with auditing standards general accepted in the United States of America. My responsibility is to express an opinion on our findings of the audit. I believe that our audit provides a reasonable basis for our opinion. Our focus was on the Shiny Teeth coupon drop. The accounting issue is determining redemption rate offered on September 1 and drop on October 1, 2012. According to FASB Accounting Standards Codification 605-50-05-1a a vendor's accounting for consideration given by a vendor to a customer (including both a reseller of the vendor’s products and an entity that purchases the vendor’s products from a reseller). Such consideration (including sales incentives) offered by a vendor on either a limited or a continuous basis to a customer may take various forms including discounts, coupons, rebates, and free products or services. The accounting issue is the correct recognition of coupons offered on the sale of toothpaste. We will address the issue of timing and measurement of the revenues and liabilities resulting from the coupon. Next, we looked at the effect of the Shiny Teeth coupon drop on its financial and how it should be recognized. The sale incentive (coupon) offered by the company and retailer reduced the price of the product by $1. On the basis of 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