WGU D252 Task 1 |Latest Update with Complete Solution

WGU D252 Task 1 |Latest Update with
Complete Solution

A.
Issue 1: Right of Return

• Characteristics: The agreement allows Ramesses II to return any unsold Model E computers
within 90 days of purchase.
• Revenue Recognition Issue: This raises the question of how much revenue KTSB can
recognize initially, given the uncertainty around potential returns.

Issue 2: Manufacturer’s Coupon

• Characteristics: KTSB introduced a $100 coupon redeemable within 90 days at KTSB's
website or Ramesses II's stores, reimbursing Ramesses II for coupons used.
• Revenue Recognition Issue: KTSB must determine if a portion of the transaction price should
be allocated to the coupons as a separate performance obligation.

Issue 3: Gift Card Commission

• Characteristics: Ramesses II will sell KTSB's gift cards and receive a 3% commission, higher
than the industry standard of 2.5%.
• Revenue Recognition Issue: KTSB needs to assess whether the commission should affect the
transaction price or if it represents a separate cost of obtaining a contract.

Issue 4: Warranty Arrangements

• Characteristics: Ramesses II handles warranty claims for the first year, offering refunds or
exchanges, with reimbursement from KTSB.
• Revenue Recognition Issue: KTSB must decide if the warranty is an assurance-type
(included in the sales price) or a service-type (requiring a separate performance
obligation).

Issue 5: Timing of Revenue Recognition

• Characteristics: Legal title transfers at delivery, but Ramesses II must accept and place the
products by September 1.
• Revenue Recognition Issue: This involves determining the point in time when control
transfers to Ramesses II for revenue recognition purposes.


B.