...Phillip Bueno Financial Reporting Case – Velocity Cellular 2/2/15 Velocity Cellular is a cell phone company who charges subscribers for its service on a yearly basis. The prepaid minutes are used by the subscriber during the year and a new voucher for another year of service must be purchased. The upgraded activation cards are one-time payments to upgrade current phones but do not provide the subscriber with a year of service. Subscribers who decide to upgrade their activation cards via the “Power Starterpack” will receive the new activation card as well as a prepaid voucher for service. The activation cards are products that can be recognized at the point of sale. However, the prepaid vouchers constitute deferred revenue which must be recognized when the service is used. When recognizing revenue for the Power Starterpack, Velocity can immediately recognize the sale of activation cards because they do not require extra service after sale. This early recognition of revenue increases income because the revenue is recognized in the same period it is earned. The prepaid vouchers in the Power Starterpack require a different method of revenue recognition. The vouchers may be redeemed in periods after the ones they were purchased in. This means that the sale of the vouchers is declared as deferred revenue because revenue is received, but the service has not yet been provided. Once service has been used by the subscriber, the revenue from the use of the service is reduced from...
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...Carrie Williams AC551 November 10, 2011 Velocity Cellular Case Study Velocity Cellular Case 1. Velocity should treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement. 2. Velocity should allocate the revenue of $200 between the activation card and the prepaid voucher. 3. A. Velocity should recognize revenue from the activation card and the prepaid voucher. B. Velocity should recognize revenue from the prepaid voucher as the minutes that are used. 4.) Velocity should disclose its use of a multiple-element arrangement in the financial statements. 1. Should Velocity treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement? According to ASC 605-25-25-5 Velocity should treat the “Power Starter pack” as a multiple-element arrangement. “In an arrangement with multiple deliverables, the delivered item or items shall be considered a separate unit of accounting if all of the following criteria are met: A. The delivered item or items have value to the customer on a standalone basis. The item or items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered item(s) on a standalone. In the context or a customer’s ability to resell the delivered item(s), this criterion does not require the existence of an observable market for the deliverable(s). B. There is objective and reliable evidence of the fair value...
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...Case Study: Velocity Cellular Case Study: Velocity Cellular Revenue Recognition in a Multiple-Element Arrangement Velocity Cellular Services is planning the rollout of a new prepaid phone service called Power Starterpack. Using the current, relevant accounting guidance, determine and support the appropriate method for recognizing revenue for this new product. Power Starterpack Details Velocity Cellular sells the Power Starterpack for $200. The Power Starterpack consists of two elements: a new activation card and a prepaid voucher for $50 worth of airtime. The new activation card allows the subscriber’s cellular phone to function and gives the subscriber additional features not available with the old activation card. Activation cards can be purchased separately from Velocity. Identical activation cards can be purchased from other vendors. The $50 prepaid airtime voucher must be used within 360 days or the remaining value is forfeited. If there is no activity for seven consecutive months, the subscriber’s account is closed and the phone number is deactivated. No refunds are given and the subscriber has no general rights of return for the Power Starterpack. Are the Deliverables Considered Separate Units of Accounting? Velocity Cellular adopted ASU 2009-13, “Revenue Arrangements with Multiple Deliverables” in the current fiscal year. The Update amends the criteria in Subtopic 605-25 for separating revenue in multiple-deliverable arrangements. The amendments...
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...Velocity Cellular: Trueblood Case 09-1 Case Study: Velocity Cellular Case Study: Velocity Cellular Revenue Recognition in a Multiple-Element Arrangement Velocity Cellular Services is planning the rollout of a new prepaid phone service called Power Starterpack. Using the current, relevant accounting guidance, determine and support the appropriate method for recognizing revenue for this new product. Power Starterpack Details Velocity Cellular sells the Power Starterpack for $200. The Power Starterpack consists of two elements: a new activation card and a prepaid voucher for $50 worth of airtime. The new activation card allows the subscriber’s cellular phone to function and gives the subscriber additional features not available with the old activation card. Activation cards can be purchased separately from Velocity. Identical activation cards can be purchased from other vendors. The $50 prepaid airtime voucher must be used within 360 days or the remaining value is forfeited. If there is no activity for seven consecutive months, the subscriber’s account is closed and the phone number is deactivated. No refunds are given and the subscriber has no general rights of return for the Power Starterpack. Are the Deliverables Considered Separate Units of Accounting? Velocity Cellular adopted ASU 2009-13, “Revenue Arrangements with Multiple Deliverables” in the current fiscal year. The Update amends the criteria in Subtopic 605-25 for separating revenue in multiple-deliverable...
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...Carrie Williams AC551 November 10, 2011 Velocity Cellular Case Study Velocity Cellular Case 1. Velocity should treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement. 2. Velocity should allocate the revenue of $200 between the activation card and the prepaid voucher. 3. A. Velocity should recognize revenue from the activation card and the prepaid voucher. B. Velocity should recognize revenue from the prepaid voucher as the minutes that are used. 4.) Velocity should disclose its use of a multiple-element arrangement in the financial statements. 1. Should Velocity treat the “Power Starter pack” prepaid phone plan as a multiple-element arrangement? According to ASC 605-25-25-5 Velocity should treat the “Power Starter pack” as a multiple-element arrangement. “In an arrangement with multiple deliverables, the delivered item or items shall be considered a separate unit of accounting if all of the following criteria are met: A. The delivered item or items have value to the customer on a standalone basis. The item or items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered item(s) on a standalone. In the context or a customer’s ability to resell the delivered item(s), this criterion does not require the existence of an observable market for the deliverable(s). B. There is objective and reliable evidence of the fair value of the...
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...Case 09-1, Velocity Cellular Statement of Facts Velocity Cellular Services is a company that sells wireless services and products based on the Global System for Mobile Communications (GSM) standard. Under the GSM standard, an activation card is necessary for every subscriber. The company is promoting Power Starterpack, a prepaid phone service plan to existing wireless subscribers. Each subscriber of this plan will get a new activation card and a nonrefundable prepaid fee of $200. The $200 prepaid voucher includes $50 worth of minutes within 360 days and a new activation card. Consumers have additional functionalities such as Bluetooth, additional memory, and international call capabilities. Consumers can also buy the activation card and additional functionalities separately. Identification of Questions & Alternatives The following questions and alternatives have been identified with respect to the disclosure of each of the anticipated insurance recoveries: 1. How should Velocity Cellular recognize revenue for the Power Starterpack? 2. How should fees be allocated on financial statements? Conclusions and Authoritative Reasoning 1. Velocity Cellular should recognize revenue for the activation card and the cell phone service (airtime) separately. a. ASC 605-25-05-2 describes the circumstances under which multiple deliverables may arise, multiple products may be delivered, performance may occur at different times or over different periods of time,...
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...Research Case “Velocity Cellular” Objectives: • The main objective of the case is to expose students to an accounting reporting situation where they have to search, identify, interpret and apply official accounting pronouncements. • The research case enhances the students’ ability to look for and evaluate relevant information. • Students should also improve their ability to organize ideas in written communication. Requirement: Assume the role of a staff accountant who has been asked to research the appropriate revenue recognition for a client, Velocity Cellular, for its new product, the Power Starterpack. You have been provided with a memo from the client describing the new product and you are to prepare your own memo to your supervisor that that discusses in your own words the existence of relevant revenue recognition alternatives given the facts of the case. You must also recommend and justify what you believe to be the most appropriate accounting treatment (which would also state why other alternative(s) would not be appropriate). Be sure to reference the specific official accounting pronouncements from the sources mentioned below. While no specific citation format is required, you should follow a generally accepted format of some kind. Resources: You can search for relevant applicable professional pronouncements or other pronouncements that you find suitable for the case using the internet as well as the Accounting Research Manager (available electronically at the...
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...Velocity cellular In the case “Velocity cellular” the company is planning to promote and market a prepaid phone service plan called “Power Startepack” in 2008. The “Power Starterpack” will provide each subscriber with a new activation card and a prepaid voucher for a total nonrefundable fee of 200$. The voucher gives the subscriber an airtime window of 360days to use 50$ worth of minutes. In addition, there are no general right of return held by the subscriber relative to the delivered items contained in the prepaid plan. In this case study, the issue is to understand which is the appropriate method for recognizing revenue for the “Power Starterpack”. Indeed, for the purpose of revenue recognition, it is important to understand whether the deliverables included in the agreement (i.e. the card and the voucher) must be considered two separate units of accounting or not. This point is particularly relevant because in accordance with GAAP 605-25-25-2: a) revenue arrangement with multiple deliverables shall be divided into separate unit of accounting if the deliverables in the arrangement meet the criteria in paragraph 605-25-25-5 b) arrangement consideration shall be allocated among the separate unit of accounting based on their relative selling prices… and c) applicable revenue recognition criteria shall be considered separately for separate units of accounting. Based on GAAP 605-25-25-5 I believe that the card and the voucher should be considered as a separate unit of accounting...
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...Arrangements-The Case of Velocity Cellular A. According to the case the ASC 605-25, the activation card should be treated as a separate deliverable and a separate unit of accounting. As mentioned in the case, each Power Starterpack prepaid phone service plan includes an activation card and an airtime voucher. As addressed in the ASC 605-25-25-5, in an arrangement with multiple deliverables, the delivered item or items shall be considered a separate unit of accounting if both of the following criteria are met: a. The delivered item or items have value to the customer on a standalone basis. The item or items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered item(s) on a standalone basis. In the context of a customer's ability to resell the delivered item(s), this criterion does not require the existence of an observable market for the deliverable(s). b. Subparagraph superseded by Accounting Standards Update No. 2009-13. c. If the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item or items is considered probable and substantially in the control of the vendor. Both the activation card and the prepaid airtime voucher have standalone value to the customer. The activation card has a standalone value since it can be purchased through other independent wireless phone retailers. Furthermore, current subscribers can purchase a new card from Velocity if...
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...Case Project for ACCT301 (30 points) 1. Revenue Recognition for Multiple-Element Arrangements– The Case of Velocity Cellular (15 points) a. (5 Points)Use Accounting Standards Codification (ASC) 605-25: Revenue Recognition: Multiple Element Arrangements and Accounting Standards Updates (ASU) to determine the appropriate method to recognize revenue for the Power Starterpack. State your reasons and relevant ASC and ASU to support one of the following two alternative treatments: 1) The activation card is not a separate deliverable and not a separate unit of accounting in accordance with ASC 605-25. 2) The activation card is a separate deliverable and a separate unit of accounting in accordance with ASC 605-25. You should use the criteria listed in ASC 605-25-25-5 (EITF 00-21) when answering the above question. b. (5 points) Assuming that the activation card is a separate unit of accounting, and the selling prices of the activation card and the prepaid voucher are $170 and $50, respectively, how should the $200 nonrefundable fee for the Power Starterpack be allocated between the activation card and the prepaid voucher? Supporting references for your answer are required. c. (5 points) What is the appropriate method for recognizing the nonrefundable up-front fees such as the service activation fee charged by a cellular phone company? You should use ASC 605-10-S99-1 or 3.f (Nonrefundable up-front fees) in Topic...
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...Case Project for ACCT301 (30 points) 1. Revenue Recognition for Multiple-Element Arrangements– The Case of Velocity Cellular (15 points) a. (5 Points)Use Accounting Standards Codification (ASC) 605-25: Revenue Recognition: Multiple Element Arrangements and Accounting Standards Updates (ASU) to determine the appropriate method to recognize revenue for the Power Starterpack. State your reasons and relevant ASC and ASU to support one of the following two alternative treatments: 1) The activation card is not a separate deliverable and not a separate unit of accounting in accordance with ASC 605-25. 2) The activation card is a separate deliverable and a separate unit of accounting in accordance with ASC 605-25. You should use the criteria listed in ASC 605-25-25-5 (EITF 00-21) when answering the above question. b. (5 points) Assuming that the activation card is a separate unit of accounting, and the selling prices of the activation card and the prepaid voucher are $170 and $50, respectively, how should the $200 nonrefundable fee for the Power Starterpack be allocated between the activation card and the prepaid voucher? Supporting references for your answer are required. c. (5 points) What is the appropriate method for recognizing the nonrefundable up-front fees such as the service activation fee charged by a cellular phone company? You should use ASC 605-10-S99-1 or 3.f (Nonrefundable up-front fees) in Topic...
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...(2014). Inhibitory Mechanism and Kinetics Study of Apple Polyphenols on the Activity of Tyrosinase. International Journal of Food Properties, 17(8), 1694-1701. doi:10.1080/10942912.2012.675606 Jones, K., Hughes, J., Hong, M., Jia, Q., & Orndorff, S. (2002). Modulation of Melanogenesis by Aloesin: A Competitive Inhibitor of Tyrosinase. Pigment Cell Research, 15(5), 335-340. doi:10.1034/j.1600-0749.2002.02014.x Kim, Y., & Uyama, H. (2005). Tyrosinase inhibitors from natural and synthetic sources: Structure, inhibition mechanism and perspective for the future. Cellular and Molecular Life Sciences, 62(15), 1707-1723. doi:10.1007/s00018-005-5054-y Ortiz-Ruiz, C. V., Maria-Solano, M. A., Garcia-Molina, M. D., Varon, R., Tudela, J., Tomas, V., & Garcia-Canovas, F. (2015). Kinetic characterization of substrate-analogous inhibitors of tyrosinase. IUBMB Life, 67(10), 757-767....
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...CAREER EPISODE ONE Analysis of Statistical Models for the Simulation of Rayleigh Faded Cellular Channels 1.2 Background 1.2.1 Nature of the project The successful design and testing of mobile communication systems requires a thorough understanding of the underlying radio propagation environment. This has motivated the development of standardized channel models and methods for the simulation of mobile radio channels. The primary goal of any channel simulation model is to reproduce the statistical properties of the real world channel as faithfully as possible. The main idea behind a class of sum-of-sinusoids (SoS) channel models is to simulate the channel as a stationary complex Gaussian random process, formed by the sum of multiple sinusoidal waveforms having frequencies, amplitudes and phases that are appropriately selected to accurately reproduce the desired statistical properties. 1.2.2 Aims of the project This project aims to compare the statistical SoS methods in terms of their complexity and performance. My partner and I decided to compare the Level Crossing Rate (LCR) and Average Fade Duration (AFD) for various models. 1.2.3 Chart of team organization This project was carried out in a two-member team. I was in charge of the team. The organization of the team is shown as below (Table 1): |Stage 1 |Literature Review; | | |Model Selection ...
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...Case Project 1. Revenue Recognition for Multiple-Element Arrangements- The Case of Velocity Cellular. a. Base on Criteria listed in ASC 605-25-25-5, the Activation card is considered option 2) “The activation card is a separate deliverable and a separate unit of accounting in accordance with ASC 605-25.” This is because 1) the activation card “has value on a standalone basis,” and can be “sold separately by any vendor or the customer could resell the item on a standalone basis” (Criteria A of ASC 605-25-25-5), and 2) the activation card does not include a general rights of return (criteria C of ASC 605-25-25-5), and so probable and substantial control from the vendor does not apply here. Therefore, the activation card is separate deliverable and a separate unit of accounting. b. Under example 1 set from ASC605-25-55-8 through 55-12, the allocation of the activation card and the prepaid voucher should be allocated as: 1. Activation card: 200[170/ (170+50)] = 154.55 2. Prepaid voucher: 200[50/ (170+50)] = 45.45 This is assuming that there is no nonrefundable down payment. c. According to ASC605-10-S99-1, section f. nonrefundable up-front fees may be recognized as “wholly or partly an advance payment for future products or services.” In other words, the up-front fee is a consideration for future obligations for continuing service. This “obligation related to the service to be provided or products to be delivered are assessed as an integrated package...
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...C . T . Bauer C o ll ege o f Busi ness Suppl y C hai n Managem ent D epar tment o f D ec i si o n an d Info r mati o n Sci ences Managing Productivity and Quality Mondays and Wednesdays (Melcher 114) Fall Semester, 2014 Professor: E-mail: Office: Office Hours: Course Website: LinkedIn: Course Materials: Books: Widely available at a discount through online retailers such as amazon.com The Lean Toolbox: The Essential Guide to Lean Transformation, Fourth Edition John Bicheno & Matthias Holweg, PICSIE, 2008/2009 Velocity: A Business Novel Dee Jacob, Suzan Bergland, and Jeff Cox, Free Press, 2010 The Memory Jogger 2, Second Edition Michael Brassard and Diane Ritter, Goal/QPC, 2010 (www.goalqpc.com) The Lean 6 Sigma Deployment Memory Jogger, Second Edition Jaime Villafuerte, Goal/QPC, 2013 (www.goalqpc.com) Cases and Articles: HARVARD BUSINESS REVIEW: https://cb.hbsp.harvard.edu/cbmp/access/27592786 NOTE: HBR articles and cases must be purchased to comply with copyright restrictions Dr. Bradley Miller bmiller11@uh.edu Melcher Hall, Room 270A Immediately following class or by appointment Blackboard http://www.linkedin.com/pub/bradley-miller/63/7a5/66a/ UH LIBRARY: http://guides.lib.uh.edu/MPQ (free) BLACKBOARD: Course Documents Folder (free) Course Notes & Resources Note slides are posted to Blackboard (Course Lecture File) prior to each class meeting Practice Problems, FAQs, Exam Reviews, Project Assignments are updated frequently Technology Microsoft...
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