AccountMArk Consultants
Proposal for Essentials
By AccoutMark Consultants
An Nguyen, Naiyu Chen, Ning Song, Peisheng Hu, Jiayi Li
We are delighted to help you. This is our operating proposal. We will work with you to future refine it, as needed.
Accounting Issues:
Part one: Sales Incentives
Coupons, rebates and other sales incentives – They are not marketing expense?
Sales incentives include coupons, points of sale discounts, mail-in rebates, free products and services, loyalty programs, etc.
The primary accounting issues:
1) What is the appropriate income statement classification for sales incentives?
2) When should the sales incentives be recorded?
Form of coupons, point of sale discounts and mail-in Rebates should be divided into two considerations:
1) Sales incentives that will not result in a loss to the company if the customer redeems them
2) Sales incentives that will result in a loss if the customer redeems them
Promotional Items (Free items or heavily discounted items)
If these items are delivered to the customer at the time of sale, Essential should record as additional cost of goods sold, not as a reduction in revenue, because the free product does not represent a return, refund, or rebate of a portion of the sales price paid by the customer.
Point and Loyalty Programs
Customers can redeem specified quantities of points for awards such as free or discounted products. For this situation, Essential should not deferred revenue related to points awarded to customers.
Part Two: Development cost
Application Development Costs – Can we capitalize them?
We should track the nature and amount of the application development cost that they incur, and they need to implement procedures to ensure appropriate reporting of such costs.
Application development activities generally fall into these stages:
1) Planning stage activities.
2) Application and infrastructure development stage activities.
3) Operating stage activities.
Part Three: sales return and gift card
Right of return:
(New
By AccoutMark Consultants
An Nguyen, Naiyu Chen, Ning Song, Peisheng Hu, Jiayi Li
We are delighted to help you. This is our operating proposal. We will work with you to future refine it, as needed.
Accounting Issues:
Part one: Sales Incentives
Coupons, rebates and other sales incentives – They are not marketing expense?
Sales incentives include coupons, points of sale discounts, mail-in rebates, free products and services, loyalty programs, etc.
The primary accounting issues:
1) What is the appropriate income statement classification for sales incentives?
2) When should the sales incentives be recorded?
Form of coupons, point of sale discounts and mail-in Rebates should be divided into two considerations:
1) Sales incentives that will not result in a loss to the company if the customer redeems them
2) Sales incentives that will result in a loss if the customer redeems them
Promotional Items (Free items or heavily discounted items)
If these items are delivered to the customer at the time of sale, Essential should record as additional cost of goods sold, not as a reduction in revenue, because the free product does not represent a return, refund, or rebate of a portion of the sales price paid by the customer.
Point and Loyalty Programs
Customers can redeem specified quantities of points for awards such as free or discounted products. For this situation, Essential should not deferred revenue related to points awarded to customers.
Part Two: Development cost
Application Development Costs – Can we capitalize them?
We should track the nature and amount of the application development cost that they incur, and they need to implement procedures to ensure appropriate reporting of such costs.
Application development activities generally fall into these stages:
1) Planning stage activities.
2) Application and infrastructure development stage activities.
3) Operating stage activities.
Part Three: sales return and gift card
Right of return:
(New