Revenue Recognition

Revenue Recognition
Intermediate II I ACG 3113 Lively I Fall 2022 Writing Assignment: Revenue Recognition
Topic: Gaines Gym Inc. (GG), offers annual memberships. Members are entitled to use of the facilities during all business hours. Annual membership fees are due in full right away – at the beginning of the membership period. GG offers customers a full refund for any unused period if for any reason a customer is not satisfied. As a result of this policy, GG recognized revenue ratably over the life of the membership rather than when the dues were received from the customer. Gaines Gym Inc.’s CEO, Ahmed Chowdhury, is not satisfied with the company’s performance this year and has requested that you, the Controller of GG, recognize the revenue when received rather than over the membership period. Requirements: Write a memo to Ahmed Chowdhury, the CEO of Gaines Gym Inc. addressing the issues identified below. This memo should be short and to the point (one page, single spaced). Font should not be larger than 12. You will also be graded on how you organize the information. There are many options with how to bundle the “answers” you give; choose the option that would make the memo easiest to read, interpret, and implement by the user. There is no one right way, so it is perfectly fine for students to take different approaches to presenting the information. 1. Discuss the factors to be considered in determining when revenue should be recognized per Accounting Standards Update No. 2014-09, Revenue from Contract with Customers. You can find a lot of good information in chapter 18 of your textbook. You may conduct additional research, if necessary, but it is not required. If needed, be sure to cite your sources appropriately. 2. Apply the above guidance to Gaines Gym, Inc.’s facts. 3. Explain to CEO Chowdhury what your decision is with respect to GG’s accounting treatment concerning membership revenues. Be sure to explicitly explain the criteria under GAAP that justifies your position. 4. If there are any potential ethical issues in this situation, please kindly explain these to the CEO. The opening to chapter 18 is a great place to read up on ethical issues related to revenue recognition.
Individual Assignment & Plagiarism: Please remember that this is an individual assignment. You may discuss the topic with others, but you are expected to do 100% of your own work. Do not share your paper with anyone else. You will need to read Chapter 18 of your textbook to better understand the issues with respect to revenue recognition. If you conduct additional research for this memo and use any ideas that are not your own, be sure to provide a citation within the memo and add a works cited listing following your memo. Additionally, you may view your Turnitin (plagiarism checker) score. If it is high, it may be flagged for potential plagiarism. Turnitin will flag anything that is a direct copy from somewhere, even if you have it documented properly. So, rest assured, if you have properly documented something that is