Instructions

Due Dates:$$Initial Post Due Wednesday by $11$:$59$ PM; Replies Due Sunday by $11$:$59$PM

This discussion$$aims$$to help you$$determine$$whether the firm is a principal or an agent, and the accounting implications of the determination.$$

AuctionCo. Com Case Study

AuctionCo.com sells used products collected from different suppliers. Assume a customer$$purchases$$a used bicycle through AuctionCo.com for $$300.$ AuctionCo.com agrees to pay the supplier $$200$ for the bicycle. The bicycle will be shipped to the customer by the original bicycle owner.$$

Questions:$$

Assume AuctionCo.com takes control of this used bicycle before the sale and pays $$200$ to the supplier. Under this assumption, how much revenue would AuctionCo.com recognize at the time of the sale to the customer?$$Explain why.$$

Assume AuctionCo.com never takes control of this used bicycle before the sale. Instead, the bicycle is shipped directly to the customer by the original bicycle owner, and then AuctionCo.com pays $$200$ to the supplier. Under this assumption, how much revenue would AuctionCo.com recognize at the time of the sale to the customer?$$Explain why.$$

Assume AuctionCo.com promises to pay $$200$ to the supplier regardless of whether the bicycle is sold, but the bicycle will continue to be shipped directly from the supplier to the customer. Under this assumption, how much revenue would AuctionCo.com recognize at the time of the sale to the customer?$$Explain why.$$