In the months leading up to Groupons IPO, the SEC posed a number of questions regarding Groupons choice of accounting principles for revenue recognition. Specifically, the SEC referred to the requirements in FASBs ASC 605-45-45.

a. Compare the amount of revenue reported in the original and amended S-1s. What caused the difference?

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

c. In correspondence with the SEC following its initial S-1 filing, how did Groupon justify its method of reporting revenue?

2010 Net Net TABLE 1 Abridged Income Statements for Groupon 2009 Income Statement Account Gross Gross Revenue $30.4 M $14.5 M $713.4 M Cost of Sales 19.5 M 4.4 M 433.4 M Gross Margin 10.9 M 10.1 M 280.0 M Marketing Expense 4.6 M 4.9 M 263.2 M General and Admin. Expense 7.5 M 6.4 M 233.9 M Other Expenses 203.2 M Net Loss 1.34 M 1.09 M 413.4 M Net Loss to common sharcholders 6.92 M 6.92 M 456.3 M EPS (Basic) (0.04) (0.04) (2.66) $312.9 M 32.5 M 280.4 M 284.3 M 213.3 M 203.2 M 420.1 M 456.3 M (2.66) This information was obtained from Groupon's S-I filing with the SEC on June 2, 2011, and the amended filing (Amendment No. 4) on October 7, 2011. 2010 Net Net TABLE 1 Abridged Income Statements for Groupon 2009 Income Statement Account Gross Gross Revenue $30.4 M $14.5 M $713.4 M Cost of Sales 19.5 M 4.4 M 433.4 M Gross Margin 10.9 M 10.1 M 280.0 M Marketing Expense 4.6 M 4.9 M 263.2 M General and Admin. Expense 7.5 M 6.4 M 233.9 M Other Expenses 203.2 M Net Loss 1.34 M 1.09 M 413.4 M Net Loss to common sharcholders 6.92 M 6.92 M 456.3 M EPS (Basic) (0.04) (0.04) (2.66) $312.9 M 32.5 M 280.4 M 284.3 M 213.3 M 203.2 M 420.1 M 456.3 M (2.66) This information was obtained from Groupon's S-I filing with the SEC on June 2, 2011, and the amended filing (Amendment No. 4) on October 7, 2011