Business has been brisk during its first three years of

Reference no: EM13592002

Outdoors R Us owns several membership-based campground resorts throughout the Southwest. The company sells campground sites to new members, usually during a get-acquainted visit and tour. The campgrounds offer a wider array of on-site facilities than most. New members sign a multi-year contract, pay a down payment, and make monthly installment payments. Because no credit check is made and many memberships originate on a spur-of-the-moment basis, cancellations are not uncommon.

Business has been brisk during its first three years of operations, and since going public in 2000, the market value of its stock has tripled. The first sign of trouble came in 2013 when the new sales dipped sharply.

One afternoon, two weeks before the end of the fiscal year, Diane Rice, CEO, and Gene Sun, controller, were having an active discussion in Sun's office.

Sun: I've thought more about our discussion yesterday. Maybe something can be done about profits. Rice: I hope so. Our bonuses and stock value are riding on this period's performance. Sun: We've been recording unearned revenues when new members sign up. Rather than recording liabilities at the time memberships are sold, I think we can justify reporting sales revenue for all memberships sold. Rice: What will be the effect on profits? Sun: I haven't run the numbers yet, but let's just say very favorable.

Consider these questions: Why do you think liabilities had been recorded previously?
Is the proposal ethical?
Who would be affected if the proposal is implemented?

Reference no: EM13592002

Questions Cloud

If the unit of measurement were changed to grams of : cholesterol in blood is measured in milligrams of cholesterol per deciliter of blood. if the unit of measurement were

Combustion of a 225g sample of a compound containing only : combustion of a .225g sample of a compound containing only carbon hydgrogen and oxygen produces .306g water and .561g

Ammonia rapidly reacts with hcl producing ammonium chloride : ammonia rapidly reacts with hcl producing ammonium chloride. calculate the number of grams of excess reactant when

Elite company is planning to add a new product to its line : elite company is planning to add a new product to its line. to manufacture this product the company needs to buy a new

Business has been brisk during its first three years of : outdoors r us owns several membership-based campground resorts throughout the southwest. the company sells campground

On january 1 2003 buster corporation issued 100 bonds with : on january 1 2003 buster corporation issued 100 bonds with a par value of 1000 each. the stated interest rate on the

The 3600 of property taxes for the house were prorated with : the 3600 of property taxes for the house were prorated with 1950 being apportioned to the seller and 1650 being

Claremont division has the capacity to make 3000 units of : claremont division has the capacity to make 3000 units of an intermediate good that is sold both internally and on the

The filter used originally weighed 04327 grams after the : the tss of a wastewater was determined using 30 ml of sample. the filter used originally weighed 0.4327 grams. after

User Account

All Pages