The facts of the case are from Consumer Cleaning Products Corporation (CCPC). CCPC estimates that the amounts to be redeemed to retailers for coupons will eventually total $20,000 (500,000 coupons * $2/coupon * 2% estimated redemption rate).
Requirements:
(1) Assume that management’s estimated dollar amount of the coupon redemptions ($20,000) is justified. How much, if any, of the $20,000 should be reported as an expense on CCPC’s 2011 Income Statement? Your answer should start by providing the most relevant specific citation from the FASB Codification: use their four digit numbering system. You should explain the relevant requirements in that section. You should then explain how the facts of the case connect to the FASB’s requirements. This explanation should logically lead to your conclusion.
(2) Do NOT assume that management’s estimated dollar amount of the coupon redemptions ($20,000) is justified: it may or may not be. What constitutes sufficient evidence of CPCC’s expected redemption rate of 2%? Your answer should start by providing the most relevant specific citation from the FASB Codification: use their four digit numbering system. You should explain the relevant requirements in that section. Explain which facts of the case are most relevant and their implications. Do an internet search to find at least one relevant fact about coupon redemptions. Provide a citation (a web address) and show how this information is relevant to helping you answer the question above. Your explanation of the relevant FASB requirements, the facts of the case, and outside information should logically lead to your conclusion.
The FASB’s professional literature is now organized by topic. It is referred to as the “Accounting Standards Codification (ASC).” FASB statements are no longer authoritative GAAP, and therefore, you should not cite them. Each part of the ASC is identified with up to four numbers separated by dashes (e.g., 305-10-15-1). Citations to the ASC should include these numbers rather than page numbers, paragraph numbers, authors, or document titles. A typical citation would be to ASC 305-10-15-1. You should never write “10-15-1” to refer to 305-10-15-1. Be as specific as possible, but sometimes it will be necessary to use fewer than four digits (e.g., “305,” or “305-10,” or “305-10-15”). No footnote or reference should be used. Write out any acronyms [e.g., write “Accounting Standards Codification (ASC)”] the first time you use it. Do not cite any source other than authoritative literature.
Your case response should be so simple that you will not need to worry about which particular style guideline to use (e.g., APA style).
Writing tips: “affect” is a verb, “effect” is a noun.
Periods and commas