High Liner Foods Inc. processes and markets seafood products throughout Canada, the United States, and Mexico under the High Liner and Fisher Boy brands. It also produces private label products and supplies restaurants and institutions. Exhibit 4-20A presents High Liner Foods€™ consolidated statements of income for 2013 and 2012, while Exhibit 4-20B is an extract from the notes to the company€™s financial statements outlining its revenue recognition policy.

EXHIBIT 4-20B EXCERPT FROM HIGH LINER FOODS INCORPORATED€™S 2013 ANNUAL REPORT EX
Revenue recognition
The Company recognizes sales in income when the risks and rewards of the underlying products have been substantially transferred to the customer, usually on delivery of the goods. The Company experiences very few product returns and collectability of its invoices is consistently high.
Marketing programs provided to customers and operators including volume rebates, cooperative advertising and other trade marketing programs are all customer specific programs to promote the Company€™s products. Consequently, sales are recorded net of these estimated sales and marketing costs, which are recognized as incurred at the time of sale. Consumer coupons used to encourage consumers to purchase the Company€™s products through the Company€™s customers are recognized as a reduction to sales when the coupons are issued. Certain customers require the payment of one-time listing allowances (slotting fees) in order to obtain space for a new product on its shelves. These fees are recognized as reductions of revenue at the earlier of the date the fees are paid in cash or on which a liability to the customer is created (usually on shipment of the new product). All other non-customer specific marketing costs (general advertising), are expensed as incurred as selling, general and administrative expense.
Required:
a. Has High Liner Foods used a single-step or a multi-step income statement? What aspects of the statement influenced your answer?
b. Calculate High Liner Foods€™ gross profit percentage for 2013 and 2012. Did the company€™s gross profit, as a percentage of its revenue, increase or decrease?
c. Calculate High Liner Foods€™ net profit rate (net earnings divided by net sales) for 2013 and 2012. Did the company€™s net profit, as a percentage of its revenue, increase or decrease?
d. High Liner Foods€™ revenue recognition policy outlines the company€™s accounting treatment for both coupons and slotting fees. In your own words, explain what slotting fees are and how they are accounted for. Is this treatment consistent with how the company accounts for coupons?

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EXCHIBIT 4-20A HIGH LINER FOODS INCORPORATED'S 2013 CONSOLIDATED STATEMENT OF INCOME Fifty-two weeks ended (in thousands of U.S. dollars, except per share amounts) Revenues Cost of sales Gross profit December 28, 2013 S 947,301 December 29 2012 942,631 735,970 206,661 Notes 731,884 215,417 Fifty-two weeks ended December 28, December 29, 2012 (in thousands of U.S. dollars, except per share amounts) Distribution expenses Selling, general and administrative expenses Impairment of property, plant and equipment Business acquisition, integration and other expenses Results from operating activities Finance costs (Income) loss from equity accounted investee, net of income tax Income before income taxes Income taxes Notes 2013 53,368 98,902 3,256 59,891 16,329 (86) 43,648 44,511 100,862 13,230 10,741 37,317 36,585 196 536 5,442 (7,109) (1,667) $2,203 Current 20 Deferred Total income tax expense (recovery) Net income PER SHARE EARNINGS Earnings per common share 12,378 (86) 12,292 $ 31,356 20 Basic 17 $ 2.07 $0.15