Situation To pump up sales of all brands, Philip Morris is moving aggressively to ship extra cases of cigarettes into distributors’ warehouses and record them as sales, a practice generally known as “trade loading.” (Adapted from Fortune, April 6, 1992). Philip Morris’ president has asked you whether these shipments may be recognized as revenue.
Directions
Research the related generally accepted accounting principles and prepare a short memo to the president. Cite your references and applicable paragraph numbers.