Transcription of Revenue and Expense Recognition - Pearson
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Revenue and Expense Recognition - Pearson
Rene Johnston/ CHAPTER BMW Group (Bayerische Motoren Werke or Bavarian Motor Works, com, Frankfurt Stock Exchange ticker: BMW) is one of the world s leading luxury vehicle manufac-turers. The company s portfolio includes well-recognized brands such as MINI, Rolls-Royce, and, of course, BMW. You should already be familiar with the accounting for the Revenue and cost of sales for tangible products such as cars: roughly speaking, Revenue and costs are recorded at the point of sale. However, BMW also sells some of its vehicles to car rental companies. In some cases, BMW has an obligation to take back the vehicles after a period of time. When should the company recognize revenues for such transactions? Is the appropriate time at the point of sale? BMW often includes a package of services in conjunction with the sale of each vehicle. For example, if the sale of a BMW 323i sedan for $35,000 includes four years of maintenance services such as oil changes and tune-ups, should the company record the full $35,000 as Revenue at the point of sale?
112 CHAPTER 4 Revenue and Expense Recognition approvals and, subsequent to that, future price and demand for the vaccine. In turn, future price and demand forecasts depend on the availability of similar or
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