I used to be an accountant,until I realized that accounting is the only field where if you try to be creative, they put you in jail.
I think you could go either way on the certificates thing--- on the one hand, the company has made a sale and, assuming they are not refundable, has earned $50 in revenue.
However, this application would ultimately create a mismatch between revenues and costs. Think about it--I buy a gift cert for $50 in December, and BGP reports revenue in 4Q. I give the gift cert, and it is redeemed in February to buy 3 books on "Internet Investing for Dummies" or something like that. Now, BGP has a cost (recognizing the cost of the books sold) and no offsetting revenue.
Ultimately, since BGP is in the business of selling books, I think the treatment they are using is probably for the best. One interesting question would be whether these certificates ever expire, because there would likely be some % not redeemed in their entirety, and so at some point, some additional earnings benefit will come via the sale of these certs. |
