Velocity Cellular Revenue Case
Case 09-1: Velocity Cellular
Page 1
D I S C U SS I O N M A T E R I A L S
O b j e c t i v es o f t h e C a se
This case gives students the opportunity to use accounting and auditing literature and professional judgment to research complex accounting issues effectively and efficiently.
Specifically, students will be able to:
Understand the application of the guidance in ASC 605-25, as amended by ASU
2009-13, to complex multiple-deliverable arrangements.
Understand the application of the guidance in SAB Topic 13.
A p p l i c a b l e P r of essi on a l P r onou n c e m e n ts
ASC 605-25, Revenue Re cogni t ion : Mul t ipl e- E l ement A r r angements (ASC 605-25)
(formerly EITF Issue No. 00-21, Revenue Arrangements With Multiple
Deliverables (Issue 00-21)), as amended by ASU 2009-13, Revenue Re cogni t ion
(Topi c 605) : Mul t ipl e- D e l ive r abl e Revenue A r r angements (ASU 2009-13) (formerly
EITF Issue No. 08(Issue 08-1))
SEC Staff Accounting Bulletin Topic 13, Revenue Recognition (SAB Topic 13)
P rof essor N ot e : This case study requires students to recognize an arrangement comprising multiple deliverables. The case study essentially focuses on determining whether the activation card represents a separate arrangement deliverable and, if so, whether this deliverable represents a separate unit of accounting. In other types of arrangements, a company may provide additional deliverables, such as hardware (cellular phone), minutes, and additional services (e.g., Web browsing, mail). Each multipledeliverable arrangement should be analyzed to determine the number of deliverables and units of accounting before determining the appropriate revenue recognition model. Given the multitude of possible combinations of alternatives, this case study focuses on the activation card to simplify the analysis that is required in analyzing a multiple-deliverable arrangement. D isc uss ion
Refer to current, relevant accounting guidance to determine
Page 1
D I S C U SS I O N M A T E R I A L S
O b j e c t i v es o f t h e C a se
This case gives students the opportunity to use accounting and auditing literature and professional judgment to research complex accounting issues effectively and efficiently.
Specifically, students will be able to:
Understand the application of the guidance in ASC 605-25, as amended by ASU
2009-13, to complex multiple-deliverable arrangements.
Understand the application of the guidance in SAB Topic 13.
A p p l i c a b l e P r of essi on a l P r onou n c e m e n ts
ASC 605-25, Revenue Re cogni t ion : Mul t ipl e- E l ement A r r angements (ASC 605-25)
(formerly EITF Issue No. 00-21, Revenue Arrangements With Multiple
Deliverables (Issue 00-21)), as amended by ASU 2009-13, Revenue Re cogni t ion
(Topi c 605) : Mul t ipl e- D e l ive r abl e Revenue A r r angements (ASU 2009-13) (formerly
EITF Issue No. 08(Issue 08-1))
SEC Staff Accounting Bulletin Topic 13, Revenue Recognition (SAB Topic 13)
P rof essor N ot e : This case study requires students to recognize an arrangement comprising multiple deliverables. The case study essentially focuses on determining whether the activation card represents a separate arrangement deliverable and, if so, whether this deliverable represents a separate unit of accounting. In other types of arrangements, a company may provide additional deliverables, such as hardware (cellular phone), minutes, and additional services (e.g., Web browsing, mail). Each multipledeliverable arrangement should be analyzed to determine the number of deliverables and units of accounting before determining the appropriate revenue recognition model. Given the multitude of possible combinations of alternatives, this case study focuses on the activation card to simplify the analysis that is required in analyzing a multiple-deliverable arrangement. D isc uss ion
Refer to current, relevant accounting guidance to determine