1. How should the $25 Referral Credit be recorded in Runway's income statement?In accordance to ASC 605-50-45 Revenue Recognition, a cash consideration handed to a consumer by a vendor or retailer is deemed a decrease in the selling prices of the products or services retailed. This would imply that these cash considerations would be deemed as an expense and a decline in the revenue to be generated by the vendor. Nonetheless, the cash consideration can be deemed as an expense if it solely meets two requirements. First, the cash consideration has to give rise to an identifiable benefit that is separable from the purchase of the recipient, in the sense that the vendor could have achieved the benefit through a third party, and not the purchaser. Secondly, the value that is provided has to be reasonably approximated by the vendor (IAS Plus, 2016).
In this case, Runway does meet these two particular requirements because the $25 credit signified the fair value of a new consumer of the business were to utilize a marketing company to acquire them. This is indicative of the two requirements for fair value and a third party. Considering this, Runway should record the $25 referral credit as a marketing expense or revenue reduction in the income statement of the company (IAS Plus,...
Accounting report generation, tackling exercises and answering exams is vital, especially when testing the competency of each student. The accounting profession is a demanding course and requires accuracy in the presentation of information: almost all skills taught in class are implemented directly in the field. This analysis presents some findings in favor of three integral exams-based learning methodologies. The ideas are extracted from chapter twelve of "Effective Writing: A Handbook
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