case study

After reading the case study, and in order to prepare for this module's MSFLive Classroom, discuss the following questions with your team. You are not required to answer every question in your discussion post(s):

1. For each of the following topics, describe the prior accounting, the likely changes (if any) the new revenue recognition standard will require, and the potential impact of those changes on patterns of revenue recognition (general direction of impacts; do not try to quantify the change amounts):

· Flight Transportation (for tickets used and for ticket/credit “breakage”) (Hint: Focus on Unexercised Rights in the new model for breakage)

· Loyalty Program (hint: focus on step 2 of the new model)

2. Where are the areas for discretion and judgment (and opportunities for earnings management)? 

3. Will the new revenue standard provide more decision-useful information than the prior US GAAP?