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Michelin Sport Cup 2 (two 19 front tires, $598. each) $1196. Michelin Sport Cup 2 (two 20 rear tires, $725. each) 1450. Track alignment/street realignment
Michelin Sport Cup 2 (two 19" front tires, $598. each) $1196. Michelin Sport Cup 2 (two 20" rear tires, $725. each) 1450. Track alignment/street realignment 160. One day performance driving clinic (Level 1) 195. Total (if priced separately) $3,001. Introductory Track Your Car Program price $2,500. Full payment must be made at the time of purchase (i.e., there is no installment plan). Purchasers usually have the track alignment done at the same time that they have the tires mounted and head right to the clinic with their cars. In addition to the bundle, first time purchasers receive a coupon that entitles them to a $100 discount for a Level 2 clinic. The discounted price of the second clinic is $95, it must be paid for at the end of the day upon completion of Level 1, and scheduled no later than 2 months following Level 1. Your task is to draft a two-page, single-spaced memo that identifies what you believe to be the proper accounting treatment for these revenue-generating activities. More specifically, at what point(s) in time should revenue be recognized, for what amount(s), and why? Your memo should (1) state the accounting problem; (2) list and describe the options that you think might in some way be defensible (including providing the FASB ASC for each option); and (3) identify what you believe to be the "best" option, providing a clear discussion of why you believe this option dominates the others. Please format your memo with headings related to these three areas. You may use bullet points in the second requirement to separate the different options you identify
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