Tag Archives: revenue recognition

How will the reservation, purchase agreement, and the delivery of a Model 3 impact Tesla’s financial statements?

Since 2016, Tesla has been accepting reservations for its Model 3 car, which is a mid-size all-electric four-door sedan. The long-range battery Model 3 (310 miles on a single charge) starts at $50,000 while the standard range battery Model 3 (220 miles) starts at $35,000. Production cannot keep up with demand for this model. Tesla […]

Continue reading

8 revenue recognition exercises for introductory financial accounting featuring LL Bean

In 2015, FASB updated the revenue recognition standards. While most of the impact of the revised revenue standard will impact Intermediate Accounting coverage, some changes will also need to be made to update introductory financial accounting coverage. Using hypothetical examples featuring LL Bean, I have developed a set of classroom exercises (and solutions) that can […]

Continue reading

When would L.L. Bean recognize sales revenue from the sale of its backordered Bean boots?

L.L. Bean operates two factories that produce its popular Bean boots (also known as “duck boots”) in its home state of Maine.  Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At […]

Continue reading

When does SurveyMonkey recognize revenue from its Platinum annual subscription plans?

SurveyMonkey is an online survey company that allows its subscribers to customize and administer surveys.  It recently made the news for raising another $250 million in equity funding (“SurveyMonkey is worth $2 billion after new $250 million fundraising round, Fortune, December 15, 2014.)  (Note: SurveyMonkey is privately held.  The founder says the company will not […]

Continue reading

What does Walt Disney’s Form 10-K communicate about its unearned revenue and accrued revenue?

Over the past year, The Walt Disney Company (DIS) has made the news because it increased its ticket prices at Walt Disney World in Florida, Disneyland Park in California, and other parks around the world.  Ticket revenue, however, is not its only source of revenue. The following is an excerpt from the Notes to Consolidated […]

Continue reading

When does Carnival Cruise Lines recognize revenues and expenses for its cruises?

Carnival Cruise Lines had a record-breaking month in January 2014 in terms of number of net bookings (new bookings less cancellations.) During January 2014, Carnival booked more than 565,000 (net) guests for cruises to be taken over the next two years. Part of the reason that Carnival may be seeing increased bookings is its new […]

Continue reading