You just went to the Overstock.com website and purchased a product for $200. The cost of the product to the company is $150 generating a gross profit of $50 to the company. Should Overstock recognize only the $50 gross profit (the net method) as commission revenue or should they recognize revenue of $200 and cost of goods sold of $150 (the gross method)?

1. Provide a summary recommendation as to whether Overstock should recognize its revenues under the net method or the gross method. Include the Codification citation that indicates the key factors in determining whether a company should employ the gross method or the net method. 2. Obtain a copy of the most current annual report (or 10-K) for overstock and determine the companys revenue recognition policy.