How ddi should record revenue if a client accepts a deal

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Reference no: EM132838472

Dealer Dave Inc. (DDI) assists its clients in obtaining new and used vehicles with desired features at the lowest possible price or with good financing terms. Clients fill out a standard form at DDI that lists their preferred type of vehicle and desired features. DDI then researches the client preferences at various new and used car dealerships and presents the best deals to the client. If the client decides to accept a deal, DDI will sign the purchase contract with the client and accept payment or arrange financing on behalf of the dealership. DDI will also arrange delivery of the vehicle to the client. All warranty and any issues after delivery are solely the responsibility of the dealership. DDI charges the client a flat fee of $300. No fees are charged to the dealerships.

Problem 1: Provide two factors that suggest DDI is acting as an agent.

Problem 2: Provide one factor that suggests DDI is acting as a principal.

Problem 3: Conclude whether DDI is acting as a principal or an agent, and discuss how DDI should record revenue if a client accepts a deal.

Reference no: EM132838472

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