Revenue Recognition Exercises

1. Urcarco, Inc. is a publicly held used-car dealer that has defined its market niche as customers with a low or no credit rating. In some years, Urcarcos repossession rate has run as high as 40% of all vehicles sold. Discuss how Urcarco should recognize revenue from vehicle sales and how it should estimate its bad debt expense.

5. *Boeing revenue recognition practices. Milestone payments are made as certain construction milestones are met. Typically 10% of contract price is withheld until successful completion. When do you think revenue should be recognized?