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Case Study Assignment Questions The case is on revenue recognition at JetBlue. Although this is a US company, the revenue recognition model is generally
Case Study Assignment Questions The case is on revenue recognition at JetBlue. Although this is a US company, the revenue recognition model is generally the same under the US GAAP and Australia accounting standards (AASB). Please apply AASB in the case analysis. Please ignore the Study Questions on p. 9 in the case document. The assignment questions are listed below: QUESTIONS 1. For each of the following two topics, describe the accounting under AASB 15 Revenue from Contracts with Customers. (1) Flight Transportation Hint: Examine the following two scenarios separately. Tickets used - Unused tickets and ticket credit (2) Loyalty Program (30%) Hint: Loyalty program includes flight and flight points. Are there two performance obligations or just one performance obligation? Focus on the following questions when applying the five-step model. What is the performance obligation? - How to allocate the transaction price if multiple performance obligations are involved? (You don't have to quantify the amounts.) - When would the performance obligation be satisfied and therefore revenue can be recognized? What is the appropriate accounting process if performance obligation has not been satisfied by a reporting date? 2. Where are the areas for discretion and judgment (i.e., opportunities for earnings management) in AASB 15 Revenue from Contracts with Customers? Hint: General discussion, not limited to the context of the case. This question focuses on the professional judgement involved in AASB 15. (20%) 3. Discuss three circumstances under which managers may utilize discretions and judgement in AASB 15 to manage earnings. Hint: General discussion, not limited to the context of the case. (20%) Students should try to access at least two research articles from academic journals to support their answers to Question 3. (Hint: Concentrate on the general results of the articles. You do not have to completely understand the statistical/econometric models. Articles from the internet or business magazines are not research articles.) COMMUNICATIONS (10%) Grammar, spelling, and paragraph structures. Please refer to the following marking rubric for more detailed criteria. (20%)
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