Groupon is a global e-commerce marketplace connecting millions of subscribers with local merchants by offering goods and
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Question:
Groupon is a global e-commerce marketplace connecting millions of subscribers with local merchants by offering goods and services, usually at a discount. Customers access the marketplace through Groupon’s mobile applications and its websites. The company generates revenues from:
(i) selling goods directly to customers and
(ii) selling goods or services on behalf of third-party merchants. In the former case, Groupon acts as the merchant of record, i.e., it buys the inventory and then resells the goods to customers. In the latter case, Groupon acts as an intermediary and earns a commission for bringing third-party merchants and customers together: customers purchase vouchers through one of Groupon’s online marketplaces, which then they can redeem with a third-party merchant for discounted goods or services. Subscribers do not have to pay a joining fee; they just need to sign up with Groupon.
Explain how Groupon should recognize these two streams of revenues, together with any issues that may arise in the recognition of costs.
Related Book For
Financial Accounting
ISBN: 9781618533111
6th Edition
Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman
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