JETBLUE AND THE NEW REVENUE RECOGNITION STANDARD

1. For each of the following topics, describe the prior accounting, the likely changes (if any) the new revenue recognition standard will require, and the potential impact of those changes on patterns of revenue recognition (general direction of impacts; do not try to quantify the change amounts):

a. Flight Transportation (for tickets 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 of the new model)

c. Ancillary Services and Other Revenue (Hint: Focus on Step 2 of the new model, and Contract Modifications for change fees specifically)

2. Where are the areas for discretion and judgment (and opportunities for earnings management)? 3. Will the new revenue standard provide more decision-useful information than the prior U.S. GAAP?