Question

Time- lice books ltd. (TLBL) is a well- established public company that publishes a wide variety of general interest nonfiction books. He company is incorporated under the can-ada business corporations act, and the heirs of harold lice, the firm’s founder, hold 30% of the shares. He heirs do not take any active interest in the affairs of the company but rely on the advice of their professional financial advisor, Mr. Jin- Shan dai, in voting their shares. He remaining 70% of the shares are widely distributed and are traded on the tsx.
He advertising brochure and sales campaign is the largest single cost incurred. He writers of the books are under a ixed- fee contract with TLBL and do not receive royalties. He layout and design work on each volume is performed by TLBL’s salaried designers. Although printing costs have been escalating sharply, the cost to print and bind each book has lately been about $5. He books are sold to customers at about $ 30 per copy. All customers may cancel their subscriptions at any time. He advance- payment subscribers must send a letter of cancellation, but few do so. He installment subscribers may cancel simply by returning one of the volumes within 15 days of receipt whereupon they are sent no more volumes in the series. At some point before the conclusion of the series, 20% to 30% of installment subscribers cancel.

Required:
Evaluate the revenue and expense recognition alternatives for TLBL for the book series.



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  • CreatedFebruary 17, 2015
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