Currently, there are 100 stations within a nine-square-kilometer radius of the Toronto centre. The new stations would be dispersed across an extra six square kilometres. In the first year, UBER's sales and marketing team estimates that these new stations will generate 600 extra monthly subscriptions (at a cost of $25 per month) and 5,000 additional annual memberships (at a rate of $100 per year).

The Toronto bicycles are accessible year-round. In Toronto, UBER's pay-per-use income accounts for almost fifty percent of all yearly and monthly membership costs combined. Since UBER's has an advertising arrangement in Toronto that permits Seneca college to place its brand on the bicycles, it may collect an extra $175 per bicycle each year. In one year, it is predicted that bicycle utilisation would increase by an additional 10 percent, but expansion beyond this point would be impossible due to capacity constraints.

In addition to the costs of the bikes and stations, annual costs associated with the new stations would include bike maintenance of $50 per bike, truck operating costs and maintenance of $200,000, wages of $160,000, general and administrative costs of $100,000, and average monthly rental of $100 per station space.

UBER is introducing a new incentive to Toronto members in order to enhance its exposure during the winter months, when bicycle utilisation normally drops.

All yearly members who check out a UBER bike more than 75 times between December and March will earn a 25% rebate on their annual subscriptions for 2021.

UBER believes that 20 percent of the 10,500 annual Toronto members will reach the objective and qualify for the reimbursement.

How do we account for this in 2021 and subsequent years if this promotion continues?

We acquired 120 bicycles (type Uber 1) four years ago and they are now in use in Toronto. Shortly after purchasing these bikes, we were able to secure a deal with a different manufacturer to develop a far cheaper and lighter bike (model uber 2). The uber 1 bicycles are still functional, although they are heavier and not quite as attractive as the more recent models.

Our operations manager gained agreement from Jasmine and the board of directors last month to replace the whole fleet of uber 1s with uber 2s. Last Monday, he arranged an agreement to sell all uber 1s to a summer camp for $40,000 on June 1, 2013. The campground has consented to our continued usage of the bicycles until then. The current carrying capacity of the fleet of bicycles is roughly $45,000. The anticipated cost to carry the bicycles to the campsite is $1,000.

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The accounting for rebate of 25 on their annual subscription will be as ... View the full answer