Question
1. For each of the following topics, describe the prior accounting, the likely changes (if any) the new revenue recognition standards will require and the
1. For each of the following topics, describe the prior accounting, the likely changes (if any) the new revenue recognition standards will require and the potential impact of those changes on pattern of revenue recognition. Indicate the general direction of impacts; do not try to quantify the change amount.
a) Flight Transportation (the ticket used and for ticket/credit "breakage") ( Hint: Focus on Unexercised Rights in the new model for breakage.
b)Loyalty Program (Hint: Focus on Step 2 on new model)
c) Ancillary Services and other revenue ( Hint: Focus on Step 2 on new model and Contract Modifications as well for change fees specifically)
2. Where are the areas for discretion and judgment ( and opportunity for earnings management)?
2.
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