Reference no: EM131411254
Most airlines offer promotional programs in which passengers accumulate miles over time; when they have earned enough miles, they receive free tickets. In the past, airlines did not make any accounting entries for these free tickets. The free rider merely uses available seats or, on occasion, displaces a ticketed passenger.
The FASB adopted a method of accounting for tickets issued under these programs. They require that a portion of the fare paid when a passenger in such a program pays for a ticket be deferred until the free ride is used. For example, if a passenger purchases a $200 ticket, a portion, say $20, would not appear as revenue to the airline until the free trip is taken. It would be considered unearned revenue until then. REQUIRED:
a. Evaluate the accounting standard in terms of the principle of revenue recognition and matching. List the criteria of revenue recognition, and suggest when it would be appropriate to recognize the revenue from a ticket sale. Given your suggestion, how should the related costs be accounted for?
b. Continental Airlines changed the way it accounts for "frequent flyer" credits, deferring more of the revenue it recognizes from this program until the service is actually provided. How would this change affect income in the year of the change, and does it appear to be a better application of matching? Why or why not?
|
African americans and race relations
: 1. How did World War I affect African Americans and race relations? 2. What did the emergence of the Harlem Renaissance mean for African American culture? What were the contributions of some of its leading figures?
|
|
Discuss why the study of group dynamics is important
: Discuss why the study of group dynamics is important to today's managers, and how it would be useful to your selected organization, in particular.Explain how group cohesiveness either is or could be developed and sustained in the organization.Discu..
|
|
Role of art in america since the gilded age
: Write a 1500-word paper, discussing the role of art in America since the Gilded Age. Include discussion of the following:
|
|
Evaluate the case study by answering the questions
: Choose one of the case studies at the end of chapters 11, 12 or 13 (not already discussed in class). Evaluate the case study by answering the questions at the end and sharing your perspective on the scenario. Your answer may be typed below and sho..
|
|
List the criteria of revenue recognition
: Evaluate the accounting standard in terms of the principle of revenue recognition and matching. List the criteria of revenue recognition, and suggest when it would be appropriate to recognize the revenue from a ticket sale. Given your suggestion, ..
|
|
Calculate the default risk premium for your investment
: CPST 371 Exam. As discussed in class an interest rate is computed with certain components such as a risk free rate, inflation and default risk of the investment. Calculate the default risk premium for your investment - show your work
|
|
Whether mother smokes or not
: Response variable = Child's IQ at age 10; explanatory variable = whether mother smokes or not; confounding variable = mother's educational level.
|
|
Largest third-party political movements
: The Populists of 1892 were one of the largest third-party political movements in American history. Describe this group in detail.
|
|
What is in the external environment of organizations
: MGT/230- What is in the external environment of organizations? BE SURE YOU CAN • list the key elements in the external environments of organizations.
|