Case 1: Revenue Recognition - Net or Gross Method The onset of the internet created a new industry of online retailers like Amazon and many others. Many of these companies often act as intermediaries between the manufacturer and the consumer without ever taking possession of the merchandise sold. Revenue recognition for this type of transaction has been controversial over time. Assume that Amazon sold you a product for $500 that cost $300. The company's profit on the transaction clearly is $200. Should Amazon recognize $500 in revenue and $300 in cost of goods sold (the gross method) or should it recognize only the $200 in gross profit (the net method) as commission revenue? Required: 1. Access the Codification and determine the specific Codification citation that indicates the key consideration determining whether revenue should be recognized at gross versus net. (hint: this is related to principal versus agent consideration). 2. Using EDGAR (www.sec.gov), access Amazon, Inc.'s 2017 10-K. Locate the disclosure note that discusses the company's revenue recognition policy. What does it say? 3. Does Amazon discuss whether it uses the net or gross method? 4. How does Amazon determine and allocate the transaction price