Week 2 Discussion Post 2 Document

JetBlue Airways Corporation. JetBlue is publicly traded on NASDAQ with a ticker symbol of

JBLU. JetBlue offers air transportation services and is currently ranked as the sixth largest

airline in the U.S. The company has an interesting history as it began in 1998 as New Air. In

February 2000, it began officially operating under JetBlue Airways. The airline focuses on

offering low-cost travel while setting itself apart with the amenities it offered. According to

their website, only JetBlue offers free wi-fi, live TV and movies at every seat—and award-

winning customer service. (JetBlue Airways, 2022)

Property and Equipment is an asset item on JetBlue’s balance sheet. According to the

financial notes, JetBlue records “property and equipment at cost and depreciate these assets

music streaming, web services, grocery stores, e-readers and tablets, and prescription drug

delivery. d They have two headquarters - one in Seattle and one in Arlington, VA.

Property and Equipment are recorded on the balance sheet following this procedure:

"Property and equipment are stated at cost less accumulated depreciation and amortization.

Incentives that we receive from property and equipment vendors are recorded as a reduction

to our costs. Property includes buildings and land that we own, along with property we have

acquired under build-to-suit lease arrangements when we have control over the building

during the construction period and finance lease arrangements. Equipment includes assets

such as servers and networking equipment, heavy equipment, and other fulfillment

equipment. Depreciation and amortization is recorded on a straight-line basis over the

estimated useful lives of the assets (generally the lesser of 40 years or the remaining life of the

underlying building, three years prior to January 1, 2020 and four years subsequent to January

1, 2020 for our servers, five years for networking equipment, ten years for heavy equipment,

and three to ten years for other fulfillment equipment). Depreciation and amortization

expense is classified within the corresponding operating expense categories on our

consolidated statements of operations. “(SEC.gov, 2021). The straight-line method based on

the useful life of the property and equipment is the way to go for depreciation purposes. The

retailer selling just about anything you can imagine. It sells items in combination from itself

as a supplier and from other 3rd party sellers that use the platform to sell their own products.

Amazon is organized into 3 segments, North America, International, and Web Services (SEC,

2018). They have streaming services for music, books, and television/video in addition to

selling actual hard goods. Amazon’s largest competitors are other online retailers (e-

commerce) and other streaming and technological services such as Netflix, Hulu, Spotify, and

Apple Music. Amazon also strives for quick, fast delivery and has created Amazon Prime

service, where customers enjoy free 2-day shipping and in some cases, same day delivery

using their own resources and assets to fulfil this.

Jeff Bezos, founder of Amazon, registered the company in Washington November 1, 1994.

of researching new business ventures. One of his ideas was to use the new up and coming

internet to sell products, to which he provided a list of 20 options to Shaw, but his ideas were

shut down. This event caused Bezos to go out on his own, and he started Amazon from his

garage, selling mainly books online for 3 reasons: books have universal demand, books are

not expensive, there were thousands of titles he could sell easily and conveniently compared

to other national book retailers such as Barnes and Noble (Capitalism, 2020). Today, Amazon

employs over 1 million full and part time employees in over 13 countries across the world

(Adock, P. 2022).

On the balance sheet, revenue is listed as the amount they expect to receive reduced by

customer through direct amazon delivery, or to a 3rd party carrier. An exception to this is with

advertising services, subscription services, and AWS which are all valued variably based on

various factors. For example, Advertising revenue is recognized once the ad is delivered, but

Subscription services can either be paid up front for the year or paid monthly by the customer.

However, Amazon recognizes subscription income over the time it is to be served. If a

customer pays $120 up front for prime for a year, that revenue is recognized at $10 a month

for 12 months. If the subscription is paid monthly, it is also recognized at $10 a month for 12

months.

The different options of recording revenues for different aspects of Amazon seems

accurate depiction of the cashflows related to that transaction. Cost of goods sold is

immediately increased and inventory is immediately decreased, resulting in actual amounts

on the financial statements. It would not be feasible for Amazon to sell a bag of dogfood each

month in a 3-month period (quarter) but only recognize the sales of those 3 bags at the end of

the quarter. In contrast, for subscription services, it would not be correct to recognize a full

year’s subscription revenue when it is paid, because that revenue must cover a 12-month

period. As an example, if a customer subscribes in August of 2021, and Amazon recognizes

that full $120 in August of 2021, it overstates revenue for 2021 because only $50 of that

countries engaging in TV series, documentaries, feature films and mobile games across a

variety of genres and languages (Mergent, 2022).

Netflix acquires, licenses, and produces content, including original programming, in order to

the Consolidated Balance Sheets (SEC, 2022). For licensed content, Netflix capitalizes the fee

per title and records a corresponding liability at the gross amount of the liability when the

license period begins, the cost of the title is known and the title is accepted and available for

production, including development costs, direct costs, and production overhead.

Participations and residuals are expensed in line with the amortization of production costs

(SEC, 2022).

References

Mergent. (2022). Netflix Inc. Mergent Online. Retrieved from: https://www-mergentonline-

com.ezproxy.snhu.edu/companyfinancials.php?compnumber=105639

SEC. (2022). Netflix, Inc: Form 10-K. SEC.gov. Retrieved from:

https://www.sec.gov/ix?doc=/Archives/edgar/data/1065280/000106528022000036/nflx-

20211231.htm

SEC. (2018). Amazon.com, Inc. Retrieved on July 7, 2022, from:

https://www.sec.gov/Archives/edgar/data/1018724/000101872418000108/amzn-

CPA Journal. d https://www.cpajournal.com/2016/09/08/depreciable-asset-lives/

SEC.gov. (2022, February 4).

https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/000101872422000005/amzn-

20211231.htm

JetBlue Airways (2022). JetBlue. Media Publications. Retrieved from

https://bluemedia.investproductions.com/media-room#highlights-slider

SEC.gov (2021). JetBlue Airways Corporation. Retrieved from