In the months leading up to Groupons IPO, the SEC posed a number of questions regarding Groupons choice of accounting principles for revenue recognition. a.In Table 1 of the Groupon Case, compare the amount of revenue reported in the original (gross method) and amended S-1s (net method). What caused the difference?

b.Which of the two amounts do you think Groupon preferred? Why did they prefer it?

TABLET Abridged Income Statements for Groupon 2009 2010 Income Statement Account Gross Net Gross Net Revenue $30.4 M $14.5 M $7134 M $312.9 M Cost of Sales 19.5 M 4.4 M 433.4 M 32.5 M Gross Margin 10.9 M 10.1 M 280.0 M 280.4 M Marketing Expense 4.6 M 4.9 M 263.2 M 284.3 M General and Admin. Expense 7.5 M 64 M 233.9 M 213.3 M Other Expenses 203.2 M 203.2 M Net Loss 1.34 M 1.09 M 4134 M 420,1 M Net Loss to common shareholders 6.92 M 6.92 M 456.3 M 456.3 M EPS (Basic) (0.04) (0.04) (2.66) (2.66) This information was obtained from Groupon's S-1 filing with the SEC on June 2, 2011, and the amended filing (Amendment No. 4) on October 7, 2011 TABLET Abridged Income Statements for Groupon 2009 2010 Income Statement Account Gross Net Gross Net Revenue $30.4 M $14.5 M $7134 M $312.9 M Cost of Sales 19.5 M 4.4 M 433.4 M 32.5 M Gross Margin 10.9 M 10.1 M 280.0 M 280.4 M Marketing Expense 4.6 M 4.9 M 263.2 M 284.3 M General and Admin. Expense 7.5 M 64 M 233.9 M 213.3 M Other Expenses 203.2 M 203.2 M Net Loss 1.34 M 1.09 M 4134 M 420,1 M Net Loss to common shareholders 6.92 M 6.92 M 456.3 M 456.3 M EPS (Basic) (0.04) (0.04) (2.66) (2.66) This information was obtained from Groupon's S-1 filing with the SEC on June 2, 2011, and the amended filing (Amendment No. 4) on October 7, 2011