Dover Books Case

Words: 976
Pages: 4
Open Document
Memorandum
To: Dover Books Inc. Accounting and Finance Department
From: Jared Richter, Associate
Date: September 12, 2016
Re: Recognizing Revenue from a Membership with Nonrefundable Initial Fees

Facts
Dover Books Inc. is a publicly held company specializing in children’s books. With about 40 stores currently open in the states of Florida, Georgia, and South Carolina, Dover Books has been growing at the rate of five new stores per year. Now, they are planning on opening 12 stores in the upcoming year.

Worrying about the ability to afford the opening of future stores, Dover Books has sought a secondary public offering with their retail banker. This banker has informed Dover Books that they need greater earnings before obtaining a beneficial …show more content…
to use for revenue recognition on nonrefundable membership fees would be to defer the revenue. As mentioned earlier, ASC 605-10 tells us that if initial fees “…are earned as the products and/or services are delivered and/or performed over the term of the arrangement or the expected period of performance…” (605-10-S99 FN39). This guidance then goes on to say that the recognition of revenue from the initial fees “…should be deferred and recognized systematically over the periods that the fees are earned” (605-10-S99 FN40). Further, FN40 says a method to utilize for recognizing the membership fee revenue over time would be the straight-line basis method over the course of the membership (605-10-S99 FN40). For example, if a membership entailed a year, then the revenue from the membership fee would be evenly recognized throughout the duration of that …show more content…
could use would be to defer recognizing revenue until the end of the year when the membership ends (assuming the Dover Books Inc.’s membership is an annual membership). Dover Books Inc. may deem it appropriate to classify the membership as being a big package of beneficial services such as the 10% discount and discounts on certain books. It may be hard for Dover Books Inc. to separate the package of beneficial membership services into distinct events, deliverables, or elements. If this is true and if Dover Books Inc. is offering products or services throughout the membership or even significantly at the end of the membership, then they may find it appropriate to recognize the revenue from the initial fees at the time of the membership’s expiration.

The last possible alternative for Dover Books Inc. to recognize revenue of the nonrefundable initial fee would be on a usage-based approach. This may be a tough method to structure without historical data, but Dover Books Inc. could possibly set-up the recognition in such a way as to recognize the revenue after the membership card has been used a certain number of times. Otherwise, Dover Books Inc. could systematically recognize revenue each time the card gets
Show More

Related Documents: Dover Books Case

a midsummer nights dream Essay

these values are not typical in Victorian society, they are influential in persons of past and future generations. Robert Louis Stevenson’s The Strange Case of Dr. Jekyll and Mr. Hyde and H.G. Wells’ The Time Machine stand the test of time for clearly expressing the existence in dualities, and it is because of these transformations of life that these books captivate audiences today. Stevenson’s story remains celebrated today because of its depiction of human nature and its divisions. For example, Dr…

Words 970 - Pages 4

Essay about English: A Tale of Two Cities and Monsieur Defarge

------------------------------------------------- A Tale of Two Cities ------------------------------------------------- Original study guide for literature ------------------------------------------------- Buy Book (US $5.99) A Tale of Two Cities By Charles Dickens Summary and Analysis Book 1: Chapter 1 - The Mail Summary: In England, the Dover mail coach makes its way up a hill one late November night. The foreboding atmosphere of night and mist makes everyone uneasy — the passengers, the coachman, and the guard. Highway…

Words 1794 - Pages 8

Zeffirelli's Critique Of Hamlet

lead roles. Mel Gibson, famous for his roles in Mad Max and, as Martin Riggs, in Lethal Weapon stars as the young Dane, Hamlet. Glenn Close, the ‘bunny boiler’ from Fatal Attraction, plays Gertrude, Hamlet’s mother. Released by Warner Bros. Pictures, Dover Castle, perched above the White Cliffs in England, provides the medieval backdrop as Shakespeare’s royal castle of Denmark, Elsinore. Zeffirelli’s interpretation of Shakespeare’s Hamlet, while action packed and entertaining lacks a certain depth and…

Words 498 - Pages 2

Stigma Research Paper

him” (Goffman 14). When others do react to the stigma, however, it is usually in a negative way. When a cripple falls during a sport, often times the “difficulty is more or less automatically attributed to ‘mental defect’” (Goffman 15), or in this case, physical defect. It does not matter that more than likely there was another explanation completely lacking the defect, the defect is the only thing that people see. Another example of this concept is when a girl, 12 years old, is criticized because…

Words 1590 - Pages 7

fahrenheit 451 2 Essay

Block Fahrenheit 451 How would you like to live in a world where you can be punished for having a book in your house? Fahrenheit 451 utilizes censorship by banning books. The author Ray Bradbury applied evidence during the story of how and why censorship can lead to disastrous things. There is no democracy, the people are told what to do, and they have to do it. No one wants that but in the book the society is completely brainwashed to the point that they can’t see that this is wrong. Henry Steele…

Words 918 - Pages 4

college task 1 5 ta Essay

Zoë Hogben Westlea Minnis Lane River Dover Kent CT170PT SH43505/OCC Teaching Assistant Level 2 Unit One Task One Describe the key aspects of the role of a teaching assistant The key aspects of a teaching assistance is to carry out a range of different tasks, these key tasks cover four main areas. - Supporting the teacher - Supporting the pupils - Supporting the curriculum - Supporting the school They can be practical and administrate tasks. Supporting the teachers, the teaching assistant will…

Words 2552 - Pages 11

Intelligent Design Argument Essay

testing to see if the structure requires all of its parts to function. When researchers find “irreducible complexity” in biology, it points to the theory of intelligent design (Intelligent Design). This test was first presented by Michael Behe in his book Darwin’s Black Box: The Biochemical Challenge to Evolution (Irreducible Complexity). He proves this through the use of three major examples: the bacterial flagellum, blood clotting, and the immune system (Irreducible…

Words 1097 - Pages 5

Candide: Candide and Possible Worlds Essay

choosing. One of the most popular types of movies that people tend to see is a comedy. A good comedy allows people to unwind while enjoying a good laugh. The library served this function during the 18th century, when writers satirized ideas through books and plays. Voltaire was one of these writers, and found it enjoyable to poke fun through the use of literature. Throughout his novel, Candide, Voltaire satirizes the optimism and order of 18th century society, forcing the reader to laugh at and realize…

Words 1064 - Pages 5

Hamlet Video Game Essay

Hamlet the Video Game: Quest for Vengeance Just like movies, books and plays, a good video game can tell a story and transport a player to a new world filled with wonderment and drama. William Shakespeare’s Hamlet provides a perfect example of a play that could easily be adapted into a video game. The world famous play follows Hamlet, Prince of Denmark, taking revenge for his father’s murder. Hamlet makes a perfect main character in a game, wandering the castle, finding items and interacting…

Words 979 - Pages 4

Tornado Essay

addition, ordinary citizen volunteers make up what is called SKYWARN (www.skywarn.org) network of storm spotters who work with their local communities to watch out for approaching tornadoes, so that those communities can take appropriate action in case of a tornado. Spotter information is relayed to the National Weather Service, which operates the Doppler radar's and which issues warnings, usually relayed to the public by radio and television, for communities ahead of the storms using all the information…

Words 995 - Pages 4